BEIJING- China’s factory-gate prices rose more slowly than expected in December after government measures to contain high raw material prices, official data showed on Wednesday, leaving room for easing monetary policy.
Consumer price inflation also slowed last month as food prices fell, the National Bureau of Statistics (NBS) said in a statement.
The producer price index (PPI) climbed 10.3 percent from a year earlier, the data showed. Economists in a Reuters poll had expected the PPI index to gain 11.1 percent after a 12.9 percent rise in November.
Factory inflation has moderated in recent months from a 26-year high in October as Beijing intervened to stabilize high raw material prices and ease an energy power crunch.
“Factory gate inflation will probably trend down further over the coming months,” said Sheana Yue, China economist at Capital Economics, in a note.
“With coal supply improving and property construction slowing, we see further downside to the price of industrial metals and energy.”
China’s consumer price index (CPI) grew 1.5 percent year-on-year in December.
Economists in a Reuters poll had expected a 1.8 percent uptick, after a 2.3 percent increase in November.
Food prices fell 1.2 percent year-on-year, with Yue pointing to a recovery in the supply of pork and vegetables after disruptions caused by bad weather in October and November.
The CPI rose 0.9 percent year-on-year in 2021, down from a 2.5 percent gain in 2020.
“Lower inflation opens room for the government to loosen monetary policies further. The probability of (an) interest rate cut is rising, in our view,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, in a note.
The world’s second-largest economy is facing a series of headwinds in 2022, including property woes, a slowing manufacturing sector and COVID-19 outbreaks as the world battles the Omicron coronavirus variant.
