Mainland's January data raise fears of deflation - RTHK
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Mainland's January data raise fears of deflation

2019-02-15 HKT 13:48
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  • The Consumer Price Index rise in January was below expectations. Photo: Xinhua
    The Consumer Price Index rise in January was below expectations. Photo: Xinhua
Latest data from the mainland showed price gains at both consumer and producer levels have come in weaker than expected in January, raising fears that its economy may see the return of deflation as domestic demand cools.

Consumer inflation eased to a one-year low in January due to slower gains in food prices despite the Lunar New Year holiday, which typically pushes up demand for food.

The Consumer Price Index rose 1.7 percent in January from a year earlier, slower than the 1.9 percent increase in December, and below expectations of a 1.9 percent gain.

The moderation was due in part to a decline in pork prices as the effects of African Swine Fever receded.

Economists are closely watching movement in prices that producers pay for materials since this is highly correlated with profit growth and serves as a leading indicator of ultimate price changes at the consumer level.

The official producer price index, which measures price increases before they reach consumers, slowed for a seventh straight month in January to its weakest pace since September 2016. It rose a meagre 0.1 percent last month from a year earlier, after a 0.9-percent increase in the previous month.

Some economists say deflation is likely to hit producer prices in the coming months and the central government may roll out further measures to ease financial pressure on firms, including cuts to benchmark lending rates.