THE country’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 Friday, despite the Chinese New Year holiday, which typically pushes up demand for food. China’s producer price index (PPI) in January rose a meagre 0.1 percent from a year earlier, data from the National Bureau of Statistics (NBS) showed, a sharp slowdown from the previous month’s 0.9-percent increase. Analysts polled previously had expected producer inflation would slow to 0.2 percent. While tame inflation gives authorities the flexibility to ease monetary policy to shore up economic growth, deflationary risks could further hurt corporate profitability. “It is too early to say China has entered the deflationary environment, but the risks definitely have heightened,” said Raymond Yeung, chief economist of China division at ANZ, adding that profitability of upstream industries will come under pressure. Data showed prices for raw materials fell in January for the first time in over two years, swinging from an 0.8 percent rise in December. Recent factory surveys show weakening domestic orders and shrinking business activity. (SD-Agencies) |