By Gina Lee

Investing.com – China’s factory-gate inflation slowed to its slowest pace in six months in January 2022, thanks to government curbs bringing raw materials prices down.

The growth was 9.1% year over year, which is slower than the 10.3% increase recorded in December 2021 or the 9.5% forecasted growth by Investing.com.

The year-on, annual decline in consumer inflation was also noted. The NBS data showed China’s consumer price index (CPI) grew 0.9% , slower than the increase of 1.5% recorded in December and the 1% growth in forecasts prepared by Investing.com.

The CPI grew 0.4% , also slower than the 0.5% growth in forecasts prepared by Investing.com and December’s 0.3% contraction.

China’s economy faces several headwinds in the year ahead, including a troubled property sector as well as weaker consumer confidence and spending as COVID-19 outbreaks lead to strict prevention and control measures.

The gradual decline in inflation at factory gates from October 2021’s 26-year peak could be a boon for downstream businesses that struggle with high raw materials costs or supply shortages.

Although Inflation is expected to persist for some time globally, China’s ability to deal with abnormal price fluctuations has improved, the National Development and Reform Commission said earlier in the month.

The supply of coal, oil, and gas will be “guaranteed”, the country’s state planner added in articles released earlier in February. The country’s state planner also predicted that the PPI will slow further while the CPI will pick up in 2022.

Investors also expect the People’s Bank of China to take further action to prop up a slowing economic recovery, with lowering inflation providing it the room to do so. On Tuesday, via the medium-term loan facility (MFL), the central bank already transferred a net CNY100billion ($15.75billion) to banks.