Inflation in China rose more slowly than expected

Inflation in China grew more slowly than expected in December. The producer price index (PPI) rose by 10.3 percent compared to the previous year, announced the National Statistics Office on Wednesday. Economists had expected the PPI index to rise by 11.1 percent, following a rise of 12.9 percent in November. Inflation weakened following the Beijing government took action once morest high commodity prices and energy shortages.

The Chinese consumer price index (CPI) rose 1.5 percent in December compared to the same month last year. In a Archyde.com poll, economists had expected growth of 1.8 percent, following 2.3 percent in November. For the full year 2021, the CPI rose 0.9 percent year-on-year, following a 2.5 percent increase in 2020.

Weaker inflation leaves the door open for further monetary easing as growth in the world’s second largest economy slows and faces headwinds in 2022. A troubled real estate market, weaker growth in the manufacturing sector and the coronavirus pandemic are causing concerns. “The lower inflation gives the government scope for further easing of monetary policy. In our opinion, the likelihood of an interest rate cut increases,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.