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Feb. 9, 2021, 10:12 p.m. EST

China's producer price index returns to growth

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By MarketWatch

BEIJING--China's factory-gate prices swung to growth in January, ending an 11-month period of deflation as the industrial sector continued to lead the nation's economic recovery.

The producer price index rose 0.3% in January from a year earlier compared with December's 0.4% fall, the National Bureau of Statistics said Wednesday. The reading was in line with the expectations of economists polled by The Wall Street Journal, who had forecast an increase of 0.3%.

Driven by improved domestic demand and rising prices of crude oil, iron ore and other commodities, China's PPI climbed 1.0% in January from a month earlier, the statistics bureau said.

Meanwhile, China's consumer price index fell 0.3% from a year earlier in January. That compared with 0.2% growth in December. Economists had expected CPI to fall 0.2%, the WSJ poll showed.

The soft CPI headline was mainly due to a higher base of comparison last year when prices of consumer goods surged before the Lunar New Year. The festival falls in February this year.

Food prices rose 1.6% while non-food prices declined 0.8%.

Service prices, including air tickets and tourism, had surged in January last year when people traveled for the Lunar New Year holidays and before the outbreaks of Covid-19.

The government has this year encouraged residents to cancel their travel plans amid a resurgence of coronavirus cases, which has dragged down service prices, the bureau said.

On a monthly basis, China's consumer inflation accelerated its increase in January due to the cold weather and new coronavirus outbreaks in northern China. The CPI rose 1.0% in January from December, the statistics bureau said.

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