Chinese Inflation Cools

Chinese consumer prices climbed 2.5% year-over-year in December.

This was less than expectations for a 2.7% rise, and down from 3% the previous month.

Food prices tend to pick up toward the end of the year and therefore, CPI is expected to moderate only a bit, despite the high base effect, UBS’ Harrison Hu said in a note published before the data was released.

“A decline in CPI to below 3.0% would be good news to market, which is concerned about monetary tightening by the PBoC,” Bank of America’s Ting Lu said.

Meanwhile, producer prices fell 1.4% on the year in December. This missed estimates for a 1.3% fall, and compared with a 1.4% fall the previous month.

Here’s a look at the trajectory of consumer and producer prices:

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