China’s consumer-price inflation in January showed only modest momentum: the headline consumer price index (CPI) rose 0.2% month‑on‑month and 0.2% year‑on‑year, according to the National Bureau of Statistics. Excluding food and energy, core CPI advanced 0.8% year‑on‑year and 0.3% month‑on‑month, the strongest six‑month monthly rise for the measure, signalling continued household demand recovery even as headline comparisons were softened by calendar effects.
The headline slowdown in the year‑on‑year CPI largely reflects a “Spring Festival timing” base effect. Last January coincided with the Lunar New Year, when food and service prices surged, lifting the comparable base and automatically narrowing this year’s headline rate. Food prices fell 0.7% year‑on‑year and energy prices slid 5.0%, the latter driven by lower petrol prices, which together subtracted materially from the headline reading.
Beneath the surface, consumption‑related prices are firming. Prices for services such as air fares and travel recovered strongly on a monthly basis, and a range of consumer goods — from household appliances to personal care — posted notable monthly gains. Industrial consumer‑goods prices excluding energy also expanded year‑on‑year, lifted by discretionary categories and a striking surge in gold jewellery prices.
Producer prices painted a more mixed industrial picture. The producer price index (PPI) rose 0.4% month‑on‑month — the fourth consecutive monthly gain — while still down 1.4% year‑on‑year, though with the annual decline narrowing. Rising domestic demand, advances in digital and AI‑related sectors, and progress in the construction of a “unified national market” pushed up prices in batteries, computer and communication equipment, and parts of the metals complex. By contrast, oil‑related sectors continued to see price pressure from international crude movements.
The combination of low headline CPI and an easing PPI contraction leaves Chinese policymakers with a familiar dilemma. The modest core CPI rebound supports confidence in household spending and may reduce the urgency of aggressive monetary loosening, but persistent weakness in producer prices — especially in energy and heavy industry — keeps pressure on corporate margins and investment. For global markets, the mixed signals mean softer than expected imported inflation from China in the near term, while commodity exporters will watch demand for metals and semiconductors more closely.
The statistics office also noted a minor technical effect from this year’s periodic base‑period (indexation) rotation, which shifted monthly year‑on‑year rates by only a few hundredths of a percentage point on average. That underscores that the principal drivers of the readings are cyclical demand, base‑year timing and international commodity price trends rather than statistical artefacts. Looking ahead, monitoring core services, labour market conditions and commodity price pass‑through will be key to judging whether the recovery in domestic demand becomes broad‑based enough to lift headline inflation sustainably.