China: Inflation Declines to Six-Month Low in January


In January, consumer prices rose 0.6% from the previous month, up from December’s 0.3% rise. The print reflected higher prices for food, tobacco, and liquors as well as for transportation and communication.

Inflation fell from December’s 1.8% to 1.5% in January. The print was in line with what market analysts had expected and represented a six-month low. Annual average inflation, meanwhile, inched down from December’s 1.6% to 1.5% in January.

Note: Year-on-year and annual average variation of consumer price index in %.
Source: National Bureau of Statistics of China (NBS).

Producer inflation fell from 4.9% in December to 4.3% in January. The print was slightly below market analysts’ expectations of 4.4% and represented the lowest level since November 2016. Annual average producer inflation fell from December’s 6.3% to 6.1% in January.

January’s dip in inflation is expected to be temporary as it largely reflects seasonal distortions related to the Lunar New Year. The slide in producer inflation was mostly due to lower growth in commodity prices.

China Inflation Forecast

FocusEconomics Consensus Forecast participants expect that consumer inflation will average 2.2% in 2018, which is unchanged from last month’s estimate. In 2019, the panel sees consumer inflation at 2.3%. Meanwhile, the panel expects producer inflation to be 1.3% in 2018, which is up 0.3 percentage points from last month’s projection. In 2019, panelists see producer inflation at 1.1%.

Author: Ricard Torné, Head of Economic Research, Focus Economics