BEIJING: China’s factory-gate inflation slowed for a seventh straight month in January to its weakest pace since September 2016, raising concerns the world’s second-biggest economy may see the return of deflation as domestic demand cools. Consumer inflation, meanwhile, eased in January from December to a 12-month low due to slower gains in food prices, official data showed on Friday, despite the Lunar New Year holiday, which typically pushes up demand for food.China’s producer price index (PPI) in January rose a meagre 0.1% from a year earlier, data from the National Bureau of Statistics (NBS) showed, a sharp slowdown from the previous month’s 0.9 % increase.
While tame inflation gives authorities the flexibility to ease monetary policy to shore up economic growth, deflationary risks could further hurt corporate profitability. On a monthly basis, producer prices have already been falling over the past three months. In December, PPI fell 0.6%, moderating from a 1% decrease in December. Prices for raw materials fell in January for the first time in over two years, swinging from a 0.8% rise in December.