1056 GMT May 26, 2019
Economists polled by Reuters were expecting CPI to come in at 1.9 percent higher year-over-year. December CPI — a gauge of prices for goods and services — had risen 1.9 percent on-year.
CPI eased due to a decline in food prices, wrote Dong Yaxiu, a statistics bureau official, in an analysis of the data.
Meanwhile, producer inflation rose just 0.1 percent from a year ago, compared to a 0.2 percent rise expected by economists polled by Reuters. China's December Producer Price Index — which measures price increases before they reach the consumer — had risen 0.9 percent on-year.
January marked the seventh straight month of slowing factory gate inflation, according to Reuters records.
The below-consensus inflation figures suggest that demand ‘remained sluggish' at the start of 2019, which may spur official action to support the economy, wrote Julian Evans-Pritchard, senior China economist at Capital Economics.
While CPI remains at a ‘comfortable level’, Evans-Pritchard said in a note on Friday that the weak producer price numbers are "a concern since these are highly correlated with profit growth in industry".
He predicted Beijing will roll out measures, such as cutting benchmark lending rates, to ease financial pressure on industrial firms as factory gate inflation looks to deepen in the months ahead.
However, weak producer prices do not always feed through into the CPI due to the concentration of heavy industries in the Producer Price Index (PPI), said Sian Fenner, a senior economist at Oxford Economics. Weak oil prices recently weighed on PPI, she noted.
"We are still expecting the disparity between the two to continue," she told CNBC.
The data comes amid a new round of US-China talks in Beijing this week as the world's two largest economies renewed efforts to reach a deal to defuse trade tensions.