Chinese factory gate inflation fell in January to its lowest rate in six months, as government intervention cooled prices in commodity markets and renewed Covid-19 lockdowns crimped demand.

The producer price index rose 9.1 per cent compared to the same period a year ago, narrowly missing the 9.5 per cent increase forecast by economists polled by Bloomberg.

The latest figures come after months of state-led intervention in energy and commodity markets following soaring factory gate inflation last year. January also saw a string of strict measures to combat the spread of the coronavirus in China, including the lockdown of Xi’an, a central Chinese city of 13mn residents.

January’s moderation in inflation was helped by declining prices of fuel and energy, metals, chemicals, timber and agricultural products, figures from National Bureau of Statistics showed.

By sector, the coal mining and washing industry saw the biggest declines, with prices falling 3.5 per cent compared to December, after the price of coal reached record highs last year.

Prices in the oil and natural gas sector rose 2.6 per cent, however, compared to December, with analysts saying that geopolitical tensions over a potential Russian invasion of Ukraine could add further price pressure.

Headline consumer price index inflation also missed forecasts, rising 0.9 per cent year-on-year, driven by a 2.5 per cent month-on-month decline in the price of pork.

“Looking ahead, PPI inflation may face upward pressure if geopolitical tensions contribute to upward pressure on commodity price,” Jing Liu, senior economist for greater China at HSBC, said in a note.

“But there is arguably more disinflationary concern given the muted core CPI inflation, as strong headwinds including the challenge posed by Omicron continue to hinder the consumption recovery and economic growth.”

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