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China’s December Consumer and Factory-gate Inflation Ease -Breaking

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© Reuters.

By Gina Lee

Investing.com – China’s consumer and factory-gate inflation cooled in December as the government intervened to retain materials prices.

Data released earlier in the day showed that the consumer price index (CPI) grew 1.5% , lower than the 1.8% growth predicted in forecasts prepared by Investing.com and November’s 2.3% growth. It contracted 0.3% in 2021, down from the 0.2% growth in forecasts prepared by Investing.com and the previous month’s 0.4% growth.

The data also showed that , lower than the growth of 11.1% in forecasts prepared by Investing.com and November’s 12.9% growth.

The slow growth of both the indexes and inflation indicated less inflationary pressure. This was because the government took action to lower high raw material prices, as well as address shortages in power.

However, the world’s second-largest economy still faces challenges in 2022 such as property woes, slowing manufacturing, and COVID-19 outbreaks. Investors may be more comfortable with a softer inflation.

“The probability of a rate cut in the first quarter is high, and the closest window is this month,” China Renaissance Securities Hong Kong Ltd. head of macro and strategy research Bruce Pang told Bloomberg.

Consumer inflation “will not be a concern in 2022” and the core measure without counting volatile food and energy costs, will stay below 1.5%, he added.

The economic outlook will be affected by measures taken to combat COVID-19. Many places, such as Shenzhen and Henan as well as Shanxi and Shanxi are experiencing an increase in COVID-19 cases. Tianjin advises citizens not to travel for Chinese New Year as cases involve the omicron variant of COVID-19.

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