- Zhou Hao, senior emerging markets at Commerzbank
China's consumer prices rose at the strongest rate in five months in January after vegetable prices increased in the run-up to the Chinese New Year. China's consumer price index climbed 1.8% in January from a year earlier, compared with a 1.6% annual rise in December, according to the National Bureau of Statistics. Increase in food prices were the main contributor to the inflation acceleration, as they surged 4.1%. Thus, the rise of inflation did not reflect a visible improvement in economic activity or broader consumer demand. Meanwhile, the non-food consumer inflation climbed 1.2% on an annual basis in January. At the same time, producer price index dropped 5.3% in January from a year earlier, declining for the 47th consecutive month and following a 5.9% slide in the prior month.
Meanwhile, China's policy makers reassured nervous investors that Beijing will cushion the slowing economy, keep its currency steady and ensure employment remains stable. A rout in Chinese stocks last summer and the unexpected devaluation of the Yuan in August have shocked global markets, fuelling concerns about the health of the world's second-biggest economy and Beijing's ability to steer it simultaneously through both a prolonged downturn and radical restructuring.
© Dukascopy Bank SA