China's Consumer Prices Rise for Fourth Straight Month...Up 0.2% in January

Amid Economic and Domestic Demand Slump
CPI Inflation at 16-Year Low
PPI Falling for Over Three Years

China's monthly Consumer Price Index (CPI) rose 0.2% last month, marking the fourth consecutive month of increases.

Auction house filled with apples. The photo is unrelated to the article. Yonhap News

The National Bureau of Statistics of China announced on the 11th that last month's CPI rose 0.2% year-on-year. This was somewhat lower than the 0.4% increase forecast compiled by Reuters and Bloomberg. In January, the CPI also climbed 0.2% compared with the previous month.

Amid concerns over deflation (falling prices during an economic downturn), China's CPI posted negative readings in August and September last year, but then turned upward with increases of 0.2% in October, 0.7% in November, and 0.8% in December.

Although the CPI continued its upward trend for a fourth straight month through last month, the pace slowed compared with December last year, when it recorded the biggest increase in 34 months.

In January, food prices fell 0.7% from a year earlier, but non-food prices rose 0.4%, driving the overall CPI higher. Prices of consumer goods and services rose 0.3% and 0.1%, respectively. The core CPI, which excludes food and energy prices, increased 0.8% year-on-year.

Dong Lijuan, chief statistician at the National Bureau of Statistics of China, cited the timing of the Lunar New Year as a reason for the slower CPI growth last month, saying, "Last year, the Spring Festival (China's Lunar New Year) fell in January, but that was not the case this year," and adding, "The Spring Festival, which typically pushes prices higher, affected the January CPI last year and created a base effect." She also noted, "A 5% decline in energy prices last month likewise had an impact."

The property market crisis, deterioration in the job market, and sluggish domestic demand have been weighing on the Chinese economy for years. Against this backdrop, a combination of overproduction and price competition pushed China's CPI inflation for last year to 0%, the lowest in 16 years since 2009. The authorities have been rolling out policies to stabilize employment, boost incomes, and stimulate consumption, but improvements in the indicators have been slow to materialize.

Last month, China's Producer Price Index (PPI) fell 1.4% from a year earlier. The PPI has remained in negative territory for more than three years since October 2022, during the COVID-19 pandemic. However, the scale of the decline has been narrowing since July last year, when it stood at -3.6%.

Bloomberg pointed to rising raw material costs and the Chinese authorities' efforts to curb excessive corporate competition, which have eased downward pressure on prices, as factors behind the smaller drop in PPI.

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