Chinese factory prices rose more slowly than expected by Reuters in December

BEIJING (Reuters) – China’s factory inflation rose more slowly than expected in December as the government took steps to keep commodity prices high, official figures showed on Wednesday.

The producer price index (PPI) rose 10.3% from a year earlier, the National Statistics Office (NBS) said in a statement. In a Reuters poll, economists expected the PPI to gain 11.1% after a 12.9% rise in November.

Factory inflation has fallen from a record high in recent weeks as Beijing intervenes to stabilize high commodity prices and alleviate energy power cuts.

The softer inflation also leaves the door open to easing money as it slows down the world’s second-largest economy and suffers from a series of headwinds in 2022, including property problems, a slowdown in the manufacturing sector and COVID-19 outbreaks.

The Chinese Consumer Price Index (CPI) rose 1.5% year-on-year in December. According to a Reuters poll, economists expected a 1.8% rise after a 2.3% rise in November.

The CPI rose by 0.9% year-on-year in 2021, up from 2.5% in 2020.

Measures to curb COVID-19 outbreaks are likely to weigh heavily on the economic outlook as the world struggles with the Omicron coronavirus variant.

Chinese cities are already advising people to stop at the peak of the Lunar New Year for travel, as a result of new outbreaks of coronavirus in various places, such as central Henan province and northern Tianjin.