China’s producer prices fall in January for 16 months; consumer prices are seeing their biggest drop since 2009
People shop for Spring Festival decorations at a market in Zixing city, central China’s Hunan province, 4 February 2024.
CFOTO | Future Publication | Getty Images
China’s producer prices fell for a 16th month in January, while consumer prices saw their biggest drop since 2009 – underscoring the depth of the challenge Beijing faces in revitalizing the world’s second-largest economy. .
China’s producer price index fell 2.5% in January from a year earlier, the National Bureau of Statistics said Thursday, slightly better than expected for a 2.6% decline, after a 2.7% drop in December.
The country’s consumer price index fell 0.8% in January annually, more than the median estimate for a decline of 0.5% in a Reuters poll. This is his fourth consecutive decline. On a monthly basis however, CPI climbed 0.3% in January from December, slightly weaker than expected for 0.4% growth.
“The deflation numbers are not a big surprise to the market, as the upward deflationary pressures have been building for over a year now, so the pressures upstream now being passed on the river,” Hao Hong, chief economist and partner at GROW. Investment Group, told CNBC’s “Street Signs Asia” on Thursday.
He pointed to the 17.3% decline in pork prices in January from a year ago, which is suffering from an oversupply after authorities moved aggressively to restore supplies of China’s staple meat in the past two years. passed away after a battle with swine flu.
Overall, food prices declined 5.9% in January from a year ago.
Core CPI – which strips out energy and food prices – climbed 0.4% in January from a year earlier, the bureau said in a separate statement. On a monthly basis, this changed to 0.3% growth in January from December, NBS said.
NBS said that the high base effect of the Spring Festival or Lunar New Year affected January inflation data, which fell in January a year ago. The festival falls in February this year.
Thursday’s inflation print underscores fears that China is teetering on the brink of inflation. Firm prices will highlight what China’s top leaders have described as a “fruitful” economic recovery after the country emerges from its magical zero-Covid curves towards the end of 2022.
China stands as an outlier among the world’s major economies, which are mostly battling high inflation. The latest official and private surveys of manufacturing activity showed that growth in market competition has limited the bargaining power of Chinese companies, lowering product prices.
Consumer confidence and broader growth in China’s economy have been hit hard by a downturn in the property market after Beijing cracked down on developers’ high reliance on debt for growth in 2020.