Consumer inflation remains high

China's consumer price index remained high in December amid softening pork prices, while factory-gate price decrease eased.

The CPI, a main gauge of inflation, jumped 4.5 percent year on year last month, unchanged from November.

For the whole year, the headline CPI rose 2.9 percent year on year, within the government's 3 percent target, according to the National Bureau of Statistics.

Lu Ting, chief economist at Nomura, said: “China’s CPI stabilized in December, mainly due to eased price growth of pork to 97.0 percent year on year in December from 110.2 percent in November, and eggs to 6.2 percent from 10.1 percent, which offset higher vegetable and non-food prices."

The upturn of the headline CPI figure was mainly driven by food prices, which soared 17.4 percent year on year, slowing from the 19.1 percent growth in November, leading to a 3.43-point rise in the overall CPI, according to the bureau.

Shen Yun, the bureau's senior statistician, said: “Pork supply was rising as government measures at national and local levels to restore hog production started to take effect. The soaring trend of pork prices affected by African swine fever and cyclical factors has softened in the past month.”

Beef, mutton, chicken and duck all saw slower price growth last month, “influenced by falling pork prices,” Shen said.

Prices of fresh vegetables and fruit rose 10.6 percent and 0.6 percent month on month respectively, due to increased production, storage and transport costs because of the cold and widespread snow. Year on year, fruit prices slumped 8.0 percent while vegetable prices surged 10.8 percent.

Of the non-food categories, prices in health care, the education, culture and entertainment sector, and clothing rose by 2.1 percent, 1.8 percent and 0.8 percent, respectively.

Transportation and communication price fell 0.7 percent year on year in December, compared with the 2.8-percent decrease in November, mainly led by transport-related fuel price growth, which was up 0.6 percent year on year.

The core CPI, which excludes food and energy prices, grew 1.4 percent year on year in December, the same pace as the preceding month.

Also released on Thursday, China's producer price index, which measures costs for goods at the factory gate and is seen as a key indicator of corporate profitability, fell 0.5 percent year on year in December, compared with November's 1.4 percent drop.

The slower pace of decline in producer prices signals a modest recovery in manufacturing activity. The milder price decrease was partly supported by a recovery in petroleum, coal and other fuel processing industries, the statistics bureau said.

For the whole of 2019, PPI was down 0.3 percent, compared with a rise of 3.5 percent in the previous year.