Explainer | China inflation: 4 takeaways from January’s data as consumer prices suffered steepest fall since 2009
- China’s consumer price index (CPI) fell in January by 0.8 per cent, year on year, marking a fourth consecutive monthly decline
- Producer price index (PPI) fell for the 16th month in a row, dropping by 2.5 per cent in January from a year earlier
1. Consumer inflation falls deeper into deflationary territory
The fourth consecutive monthly drop was worse than the expected fall of 0.5 per cent polled by Chinese data provider Wind.
Lynn Song, chief economist for Greater China at ING, said the primary drag on inflation continued to be food prices, which fell from minus 3.7 per cent in December, year on year, to minus 5.9 per cent in January.
Analysts at Capital Economics said the fall largely reflected a higher base for comparison caused by a shift in the timing of the Lunar New Year holiday from January in 2023 to February this year, and the lifting of China’s zero-Covid policy at the start of last year.
“CPI fell deeper into deflationary territory last month. But this was largely due to the usual volatility in food and tourism prices around Chinese New Year,” they said.
Junyu Tan, a regional economist for North Asia at Coface, said China’s CPI deflation intensified in January from a high base a year ago, while the drag from pork and fuel prices persisted.