The National Statistics Bureau released the data for consumer price index for January 2011. The headline inflation was 4.9%, lower than the expected 5.5%. Inflation in urban areas rose 4.8% and 5.2% in rural areas. Looking at individual components, food prices are still the biggest driver for the overall headline number, rising 10.3% over the year ago, although still lower than 11.7% we saw in November 2010. Among food prices, prices for fresh fruits rose 34.8%, the biggest of all food categories. We saw a drop in prices for vegetables in December, though it is back in positive territory. The National Bureau of Statistics said prices were affected by the Chinese New Year and cold weather in January 2011.
Source: National Bureau of Statistics
Overall, inflation was slower than people would have fear, and it does not seem to have a lot of big surprises with the individual components. However, the high food prices should still be a big concern, particularly for the people in the poorer regions of China, as their expenses on food would represent a larger chunk of their total expenses. We should also bear in mind that the effect of cold weather and drought, if any, will not be obvious in the CPI numbers until probably a few months later. Of course, you can always raise the question on whether we can really trust the numbers at all.
On another note, the producer price index showed a 6.6% increase in January 2011 over a year ago. Input Prices rose 9.7% over a year ago. So inflation is pretty much there.
Later today, the United Kingdom will announce its CPI, and the United States will announce CPI on Thursday. See here on what to expect for the week of CPI.