China Producer Price Index Growth Slows for Third Consecutive Month... January PPI Up 9.1%

Raw material price stabilization slows rise for 3 consecutive months
Consumer Price Index rises 0.9%, below forecast

[Asia Economy Reporter Kim Hyunjung] Due to the decline in raw material prices, China's producer price index (PPI) growth slowed for the third consecutive month. Concerns over an inflation shock originating from China, following the United States, are expected to ease somewhat.

According to the National Bureau of Statistics of China on the 16th, the PPI in January this year rose 9.1% year-on-year, marking a slowdown in the upward trend for three consecutive months. This figure not only fell short of experts' forecast (9.5%) but also recorded a single-digit increase for the first time in five months.

China's monthly PPI growth rate surged to 13.5% in October last year due to the sharp rise in global raw material prices, marking the highest level in 25 years since 1996. Subsequently, it narrowed to 12.9% in November and 10.3% in December. This is interpreted as a result of the decline in global raw material prices, which had been a factor driving inflation.

However, it is too early to be complacent. Depending on the developments in the Ukraine situation, international oil prices could soar again, reigniting inflationary pressures from China. As tensions related to the situation escalated, the March delivery West Texas Intermediate (WTI) crude oil traded at the New York Mercantile Exchange on the 14th reached as high as $95.82 per barrel during the session, marking the highest level since 2014. If the producer prices in China, known as the 'world's factory,' rise sharply, the prices of finished products produced using Chinese goods or labor will inevitably increase as well.

On the same day, China's January consumer price index (CPI) rose 0.9% year-on-year. This figure fell short of Bloomberg's forecast (1.0%) and marked a slowdown for the second consecutive month.

The slowdown in the rise of producer and consumer prices also indicates an economic slowdown within China. Earlier, the International Monetary Fund (IMF) revised down China's economic growth rate for next year from 5.6% to 4.8% by 0.8 percentage points in its World Economic Outlook released last month. This adjustment exceeds the global average revision (-0.5%). Additionally, the IMF lowered China's growth rate for 2023 from 5.3% to 5.2%.

This content was produced with the assistance of AI translation services.