Consumer price index (CPIThere was an annual decrease of 0.8% in January, the main indicator of inflation in China.This figure, which is 0.5 points below December, represents the fourth consecutive month of decline and a new step in the deflationary trend.
About Biggest annual drop in a month Chinese since September 2009and also the longest streak of declines since that year, when the CPI was negative for three consecutive quarters. The indicator fell short of analysts’ expectations, with the most common forecast for a decline of 0.5%.
ONE attributes the year-on-year decline to a higher comparative base resulting from the January celebration of Lunar New Year, the main festive season of the year in China, in 2023; This year it will take place in January. current month. In fact, the statistician of the Dong Lijuan institution points precisely to the holiday effect, highlighting the 0.3% monthly increase in CPI (the second in a row and the largest since August).
Dong also highlighted the 0.3% monthly increase “in line with the average of the last decade” and the 0.4% annual increase in core inflation, which excludes food and beverage prices. measurement energy due to its volatility.
New Year… and more
The statistician explained that the annual decline in the CPI was also due to the fact that it occurred precisely in January of the year, when China officially ended its nearly three-year “zero covid” policy, which translated into an increase. is in demand by consumers. Food prices in particular fell by 5.9% year-on-year; According to Dong, the decline in pork (-17.3%), vegetables (-12.7%) and fruit (-9.1%) explains more than 90% of the contraction in CPI compared to last year. Meanwhile, the impact of holidays and cold waves led to a 0.4% monthly increase in food prices, while there were also significant increases in air tickets (+12.1%) and tourism services (+4.2%) due to passenger demand. .
“We believe that CPI will return to positive territory Julian Evans-Pritchard and Zichun Huang, analysts at consultancy Capital Economics, agree with the base effect thesis from the Lunar New Year, but emphasize that food prices fell even in January. These experts believe that “structural imbalances between supply and demand mean that core inflation is likely to remain muted compared to pre-pandemic norms for the foreseeable future.” Seasonally variable or a decline in population, such as automobiles whose deflation reached a record low of 5.6% annually in the context of a price war between electricity producers, or rentals slowing to 0.2% due to an oversupply of real estate.
Industrial prices continue to fall
ONE also released today the Producer Price Index (IPP), which measures industrial prices and recorded a 2.5% year-on-year decline in January. There was a decline for the sixteenth consecutive monthhowever, it once again moderated its decline compared to the 2.7% recorded in December. In this case, the contraction was slightly less pronounced than expected by analysts, who predicted a 2.6% year-on-year decline in January. On a monthly basis, PPI decreased by 0.2% compared to December, contracting for the third consecutive month.
Evans-Pritchard and Huang point out that monthly declines have occurred at a slower pace (0.1 points lower than in December) due to the rise in metal prices and the recent recovery in infrastructure spending. Experts believe that inflation will remain generally low in 2024, averaging 0.5%; This estimate is well below the 2.4% estimate reported yesterday by economic news portal Yicai, after a series of consultations with leading Chinese economists.