BEIJING, Feb 11 (Reuters) – China’s consumer inflation cooled in January while producer price deflation persisted, reinforcing market calls for more policy measures to address the mismatch between supply and demand.
The consumer price index (CPI) rose 0.2% from the same month last year, data from the National Bureau of Statistics (NBS) showed on Wednesday, compared with a 0.8% increase in December and missing expectations in a Reuters poll for a 0.4% rise.
The producer price index (PPI) fell 1.4% year-on-year, with the downturn easing for a second month but extending a years-long deflationary trend. Economists polled by Reuters had expected a 1.5% drop.
The moderation in the year-on-year rise of consumer prices was mainly due to a high base and sharper declines in energy prices, Dong Lijuan, a statistician at NBS, said in a statement.
A government campaign to curb overcapacity and price competition in major industrial sectors, including solar energy and auto manufacturing, has somewhat mitigated factory-gate price deflation.
But PPI deflation has persisted and continues to weigh on industrial firms’ profits, indicating the need for more policy measures to boost effective demand and address deep-rooted imbalance in the economy.
Chinese manufacturers still rely on exports to absorb their production capacity, with the country logging a whopping $1.2 trillion trade surplus in 2025 while fighting a trade war with the United States.
Policymakers have repeatedly pledged to better align supply and demand and promised to raise people’s incomes to spur goods and services consumption. They also vowed to keep cracking down on excessive competition and ensure smoother exit of inefficient production capacity in order to stabilise prices.
The government also pledged to implement “more proactive” macroeconomic policies in 2026. The central bank has in January cut sector-specific interest rates and earmarked more cheap loans to small and medium-sized tech and private firms.
China will unveil its next five-year development plan and GDP growth target for the year at the annual parliamentary session in early March.
Consumer prices in January last year got a bump from the Lunar New Year holiday, which started in late January and pushed up food and services prices. The holiday this year will begin in mid-February.
Core CPI, which excludes volatile prices of food and fuel, rose 0.8% year-on-year last month, down from the 1.2% rise in December.
On a monthly basis, CPI edged up 0.2%, missing a forecast for a 0.3% increase and matching the rise in December.
(Reporting by Yukun Zhang and Ryan Woo; Editing by Sam Holmes, Christian Schmollinger and Shri Navaratnam)
