China's December factory prices fall at slowest pace in ten months

FILE PHOTO: Employees wearing face masks work at a factory of the component maker SMC during a government-organized tour of its facility following the outbreak of the coronavirus disease (COVID-19), in Beijing, China May 13, 2020. REUTERS/Thomas Peter

BEIJING (Reuters) – China’s factory gate prices fell last month at their slowest pace since February, official data showed on Monday, suggesting China’s manufacturing sector continues to see a steady recovery from the COVID-19 shock.

The producer price index (PPI) fell 0.4% from a year earlier, the National Bureau of Statistics said in a statement. The index was expected to fall 0.8%, according to a median forecast in a Reuters poll, after a 1.5% drop in November.

The data comes as manufacturing activity in the world’s second-largest economy expanded in December but at a slightly slower pace amid higher raw material costs.

On a monthly basis, PPI rose 1.1% in December after increasing 0.5% in November, pointing to improving corporate profitability.

Prices for raw materials fell 1.6% from a year ago, compared with a decline of 4.2% in the previous month.

China’s industrial sector has staged an impressive rebound from the coronavirus shock thanks to surprisingly strong exports, helping to fuel a robust economic recovery. But rising global infections – and fresh coronavirus curbs in many countries – may cloud the outlook for Chinese manufacturers.

The consumer price index (CPI) rose 0.2% from a year earlier in December, after easing 0.5% in November, the first fall since October 2009. Analysts in the Reuters poll had forecast a 0.1% rise.

Food prices rose 1.2% from a year ago, compared with a decline of 2.0% in the previous month.

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