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China's Inflation Slid Down Despite Crash of Stock Market


February, 09 2018
watermark Economic news

Both producer and consumer inflation abated as anticipated for the month of January despite the decline in the global stock market as investors panic adding more pressure that slowly increases in the United and Europe.


The easing of Chinese inflation demonstrates the Asian economy as the second biggest economy is slowly losing its steam following a record-breaking growth of 6.9 percent last year.


However, earlier data this year is viewed with vigilance following slanted prices due to long Lunar New Year celebrations in late January 2017 but began in the middle of the month.


Chinese producer inflation decreased for a third straight month in January, which is slightly higher than anticipated based on the released report on Friday. This implies a strong profit in the previous year as the industrial sector begins to curtail.


Low returns of Chinese companies might become a problem with a rising debt of Beijing to lessen risks in the financial system.


The producer price index (PPI) climbed to 4.3  in January compared a year ago, which was the smallest increase in 14 months than 4.9 percent in December. Analysts foresee the figure to reach 4.4 percent, reflecting a little increase for raw materials and finished goods such as steel.


Moving on to the monthly basis of PPI, it increases by 0.3 percent in January which is just more than a quarter of the report the month prior.


Another indicator, consumer inflation declined to its lowest level since July last year.


The consumer price index (CPI) rallied 1.5 percent than last year which still met the expected value from 1.8 percent gain in December, according to the  National Bureau of Statistics (NBS). On a monthly basis, the CPI soared to 0.6 percent in January.  


The softer inflation data is in contrary to strong import and export data on Thursday, which implies the Asian nation was able to maintain the impetus and is likely to recover at the start of the year.


However, the weakened price data in January does not mean that it is in a distinct slow down which can be affected by seasonal factors. As a whole, a moderate pullback of the GDP growth to 6.4 percent this year.  


Thus, policymakers are not expecting a sharp increase in retail prices that would prompt the central bank to change its direction and tighten the policy at a quicker rate.


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