China Continues Economic Rebound

China's consumer inflation eased while factory-gate prices rebounded in January, official data showed Wednesday.

The country's consumer price index (CPI), a main gauge of inflation, declined 0.3 percent year on year in January, compared with a 0.2-percent increase in December last year, the National Bureau of Statistics (NBS) said.

Food prices increased 1.6 percent year on year last month, up 0.4 percentage points from December and contributing about 0.3 percentage points to the CPI increase, said Dong Lijuan, a senior statistician with the NBS.

China saw a CPI hike in January 2020, which was mainly driven by the effect of the Spring Festival holiday.

Dong said the relatively high base was the main factor that dragged the country's CPI into negative territory last month.

In breakdown, prices of vegetables climbed 10.9 percent in January from a year earlier, while those of pork, chicken and duck declined 3.9 percent, 10.7 percent and 6.8 percent year on year, respectively.

Excluding food and energy, the core CPI declined 0.3 percent year on year, which was mainly due to a decrease in service prices.

On a monthly basis, the CPI edged up 1 percent, expanding 0.3 percentage points from a month earlier.

Dong attributed the increase to the coming Spring Festival, local epidemic situation and low temperatures, among other factors.

Wen Bin, a chief analyst at China Minsheng Bank, said in a co-authored research note that there is no need to read too much into the negative growth of January's CPI.

As the impact of the COVID-19 epidemic fades out and domestic demand rebounds, tourism, catering and accommodation sectors will recover and prices in those sectors will rise, said Wen.

Wednesday's data also showed China's producer prices, which measure costs for goods at the factory gate, rose 0.3 percent year on year in January amid a steady recovery in domestic demand.