China January inflation plunges to 0.8%, lowest in more than 5 years

BEIJING (AFP) - China's inflation plunged to 0.8 per cent in January, its lowest level for more than five years, official data showed Tuesday.

The rise in the consumer price index (CPI) was sharply down from the 1.5 per cent recorded in December, according to figures provided by the National Bureau of Statistics (NBS).

The CPI figure reinforces signs of persistent weakness in the economy and broadens the scope for further stimulus steps by the central bank to ward off deflationary risks.

Analysts polled by Reuters had expected annual consumer inflation to be 1.0 percent in January, compared with 1.5 per cent in December.

The producer price index also missed forecasts, dropping 4.3 per cent, NBS said on Tuesday, its 35th consecutive monthly decline, as sluggish demand curbed the pricing power of companies. The market had expected a 3.8 per cent fall in producer prices after a drop of 3.3 per cent in December.

Falling global energy and materials prices have weighed on China's factory prices, and to a lesser extent, consumer prices..