China's consumer price index (CPI), a main gauge of inflation, increased by 1.5 percent in January from the previous year, the National Bureau of Statistics (NBS) announced today.
The increase was 0.4 percentage points lower than the previous month, which saw a 1.9 percent year-on-year increase, the highest rate in nearly two years.
China's producer price index (PPI), a major measure of inflation at the wholesale level, increased by 4.3 percent year-on-year in January.
Industry observers said the heavy snow in the first two weeks of 2010 contributed to the rise in food prices that has driven up January's inflation. As the weather gradually becomes mild, food prices began to stabilize.
Though the eased inflation rate has reduced the pressure to raise interest rates, the upward trend of CPI continued.
Ba Shusong, a renowned economist with the Development Research Center under the State Council, the government's think-tank, said the central bank might raise the interest rate when the CPI increase exceeds 2.25 percent, the current one-year benchmark deposit rate, according to chinanews.com.cn.
The trend of PPI indicated that the profits of enterprises would increase rapidly, said Wei Fengchun, a macro economy analyst with China Securities Co.
In January 2010, manufacturer's prices of gasoline and diesel oil rose 16.6 percent and 15.0 percent year-on-year respectively, while kerosene prices declined 6.7 percent year-on-year.
Manufacturer's prices of crude coal went up 5.3 percent from the same period of last year.
Manufacturer's prices of aluminum, lead, zinc and copper climbed 12.6 percent, 32.0 percent, 39.7 percent and 67.0 percent from the previous year, respectively.
