Financial News: China CPI Inflation Softens; Producer Price Deflation Ease

China CPI Inflation Softens; Producer Price Deflation Eases

(RTTNews) - China inflation softened in January due to Lunar New Year holiday effects, while producer price deflation softened, official data revealed Wednesday.

Consumer price inflation weakened to 0.2 percent in January from 0.8 percent in December, the National Bureau of Statistics reported. Inflation was seen at 0.4 percent.

On a monthly basis, consumer prices gained 0.2 percent, slightly slower than the expected growth of 0.3 percent.

Core inflation that excludes prices of food and energy, eased to 0.8 percent from 1.2 percent in the prior month.

As festival holiday came in February this year compared to January last year, creating a higher base of comparison, food prices logged an annual fall of 0.7 percent, reversing a 1.1 percent rise in December.

At the same time, non-food inflation fell to 0.4 percent from 0.8 percent.

Producer prices declined at a slower pace of 1.4 percent in January after easing 1.9 percent in the previous month, the NBS said in a separate report. Economists were forecast a 1.5 percent fall for January.

ING economist said CPI inflation is expected to be on track to recover overall in 2026. The economist expects Beijing to maintain its inflation target for 2026 at around 2 percent.

Although inflation is set to come comfortably below the target, it is not likely to substantively affect the central bank's decision-making, he noted.

"Given the soft domestic indicators over the past few months, we still think there is a solid case for further easing this year, and expect there will be room for the first move in 1H26, likely to start off with a 10bp rate cut and a 50bp Reserve Requirement Ratio cut," Song added.

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