Shanghai (China) (EFE).- The consumer price index (CPI), the main indicator of inflation in China, increased by 2.1% year-on-year in January due to the celebration of the Lunar New Year and the end of national politics of ‘zero covid’, factors that boosted consumption, especially that of food.
For its part, the producer price index (IPP), which measures industrial prices, fell by 0.8%, according to official data published today by the National Statistics Office (ONE).
The CPI had risen 1.8% in December and 2% overall in 2022, while the PPI fell 0.7% year-on-year in the last month of last year, thus moderating its progress throughout the year to 4.1%.
The evolution of both indicators in January was slightly below what was expected by analysts, who forecast an increase of 2.2% for the CPI and a contraction of 0.5% for the PPI.
In the month-on-month comparison, the CPI increased by 0.8% -thus surpassing all registered records throughout 2022- and the PPI decreased by 0.4%.
The ONE statistician Dong Lijuan stressed that, apart from the rise in prices of food products, the end of the ‘zero covid’ and its temporary coincidence with the country’s main annual holiday also caused increases of around 20% compared to December in the prices of plane tickets due to the increase in demand, which also generated similar effects in tickets for cinema and other shows or in tourist services.
“We expect China’s reopening to drive inflation even higher in the coming months, but we doubt it will rise as much as it did in other countries when they reopened. Unlike in developed economies, Chinese households received fewer fiscal transfers during the pandemic and suffered negative wealth effects, not positive ones,” said Julian Evans-Pritchard and Zichun Huang, analysts at British consultancy Capital Economics.
In the case of industrial prices, the ONE attributed the new fall to “fluctuations” in international crude oil prices or to falls in coal at the national level, although it should be remembered that the PPI has been drawing a descending line for months due to the base effect after the strong inflation rates it experienced at the end of 2021 and the beginning of 2022.
The current situation leaves room for the People’s Bank of China (BPC, central) to make its policies more flexible and thus prop up the economic recovery, considers Capital Economics, which predicts that the institution could announce a rate cut this month.