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China’s factory gate inflation fell to its lowest rate in six months in January as government intervention cooled prices in commodity markets and further Covid-19 shutdowns swept weighed on demand.

The producer price index rose 9.1% from the same period a year ago, narrowly missing the 9.5% rise predicted by economists polled by Bloomberg.

The latest figures come after months of state-led intervention in energy and commodity markets in the wake of soaring factory gate inflation last year. January also saw a series of strict measures to combat the spread of the coronavirus in China, including the lockdown of Xi’an, a central Chinese city of 13 million people.

The moderation in inflation in January was helped by lower prices for fuel and energy, metals, chemicals, timber and agricultural products, according to figures from the National Bureau of Statistics.

By sector, the coal mining and washing industry saw the largest declines, with prices down 3.5% from December, after the price of coal hit record highs last week. last year.

Prices in the oil and natural gas sector, however, rose 2.6% from December, with analysts saying geopolitical tensions related to a possible Russian invasion of Ukraine could increase pressure on prices.

Headline consumer price index inflation also beat forecasts, rising 0.9% year-on-year, led by a 2.5%-month-on-month drop in the price of pork.

“Looking ahead, PPI inflation could face upward pressure if geopolitical tensions contribute to upward pressure on commodity prices,” said Jing Liu, senior economist for Greater China at China. HSBC, in a note.

“But there are arguably more disinflationary concerns given weak core CPI inflation as strong headwinds, including the Omicron challenge, continue to hamper the consumer recovery and economic growth. .”

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