News ID: 209697
Published: 0650 GMT February 09, 2018

China inflation rate cools, hinting economy losing steam

China inflation rate cools, hinting economy losing steam

China’s producer and consumer inflation eased as expected in January, even as global stock markets nosedive on fears that price pressures are slowly building in the US and Europe.

A moderation in Chinese inflation would support the view that the world’s second-largest economy is slowly starting to lose some momentum after forecast beating growth of 6.9 percent in 2017, wrote.

But data from China early in the year must always be treated with caution due to business and price distortions caused by the timing of the long Lunar New Year celebrations, which fell in late January 2017 but start in mid-February this year.

China’s producer inflation eased for a third straight month in January and by slightly more than expected, official data showed, suggesting last year’s strong profit growth in its industrial sector may be starting to fade.

Lower profits could impair Chinese firms’ ability to service and pay down a mountain of debt as Beijing works to reduce risks in the financial system.

The producer price index (PPI) rose 4.3 percent in January from a year earlier, the smallest rise in 14 months and compared with 4.9 percent in December.

On a monthly basis, the PPI rose 0.3 percent in January, less than half the pace seen in the previous month.

China’s consumer inflation also eased to the lowest since July 2017.

The consumer price index (CPI) rose 1.5 percent from a year earlier, in line with expectations and slowing from December’s gain of 1.8 per cent, the National Bureau of Statistics said.

On a month-on-month basis, CPI rose 0.6 percent in January.

The food price index declined 0.5 percent from a year earlier due to a higher base last year, after falling 0.4 percent in December. Non-food prices rose 2.0 percent, compared with 2.4 percent in December.

Sources said that China’s government will maintain a three percent consumer inflation target for 2018, suggesting policymakers are not foreseeing any sharp price rises that could force the central bank to change course and tighten policy more quickly.

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