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China factory gate inflation slips to 14-month low

China factory gate inflation slips to 14-month low

China's factory inflation eased to a 14-month low in January while consumer prices grew at their slowest rate in six months...

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09.02.2018 04:03 PM

China's factory inflation eased to a 14-month low in January while consumer prices grew at their slowest rate in six months, official data showed Friday.

The producer price index (PPI) -- an important barometer of the industrial sector that measures the cost of goods at the factory gate -- came in at 4.3 percent year-on-year in January, according to China's National Bureau of Statistics (NBS).

January's PPI reading was the lowest since November 2016, though it was in line with forecasts by a Bloomberg News survey of economists.

It also dropped for the third consecutive month, with readings of 4.9 percent in December and 5.8 in November of last year.

The consumer price index (CPI) -- a main gauge of retail inflation -- rose 1.5 percent year-on-year, down from 1.8 percent in December and in line with forecasts.

NBS analyst Sheng Guoqing attributed the drop to Chinese New Year -- the country's largest holiday -- falling in January in 2017 but February this year.

"Declines in non-food inflation and producer price inflation will open the door to monetary policy easing this year," said Julian Evans-Pritchard of Capital Economics in a research note.

"The broader trend is that underlying price pressures are starting to cool on the back of weaker economic activity."

Other analysts took heart in the stable numbers from China's factories.

"The stable factory inflation suggests China's economy is steady and that's good news for the global economic recovery," Banny Lam, head of research at CEB International in Hong Kong told Bloomberg.
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