Prices at China’s factory gates rose more slowly than expected in December after government measures to stem the rise in raw materials, official data showed on Wednesday, leaving room for monetary policy easing.
The producer price index rose 10.3% in December from a year earlier, data from the National Bureau of Statistics showed. Economists polled in a Reuters poll had expected an increase of 11.1%, after the index rose 12.9% in November.
Producer inflation has moderated in recent months from a 26-year high seen in October after Beijing moved to stabilize high raw material prices and ease the energy crisis.
“Factory gate inflation is likely to show more of a downward trend in the coming months,” Sheana Yue, an economist at Capital Economics, said in a note.
China’s consumer price index rose 1.5% in December year on year, against expectations of a 1.8% rise and a 2.3% advance in November.
Food prices fell 1.2% on the year, with Yue highlighting a rebound in pork and vegetable supplies following problems caused by bad weather in October and November.
The consumer price index rose 0.9% in 2021 from 2.5% in 2020.
“Lower inflation makes room for the government to loosen monetary policies further. The likelihood of a rate cut is increasing, in our view,” Zhiwei Zhang, chief economist at Pinpoint Asset Management, said in a note.
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