In January 2021, China's producer prices decreased for the 16th consecutive month, while consumer prices experienced their largest decline since 2009.

• The National Bureau of Statistics reported on Thursday that China's PPI fell by 2.5% in January compared to the same month the previous year, slightly better than anticipated with a decline of 2.6%.
• In January, the Consumer Price Index (CPI) decreased by 0.8% on an annual basis, exceeding the median forecast of a 0.5% decline, as reported in a Reuters poll. This marked the fourth consecutive decline and the largest drop since 2009.

In January, China's producer prices fell for the 16th month in a row, while consumer prices experienced their largest decline since 2009, highlighting the severity of the economic challenges faced by Beijing in revitalizing the world's second-largest economy.

In January, China's producer price index decreased by 2.5% compared to the previous year, according to the National Bureau of Statistics, slightly better than anticipated, after a 2.7% decline in December.

In January, the country's annual consumer price index decreased by 0.8%, exceeding the median estimate of a 0.5% decline, as it marked its fourth consecutive decline. However, on a monthly basis, the CPI rose by 0.3% from December, which was slightly below the median expectation of 0.4% growth.

Hao Hong, chief economist and partner at GROW Investment Group, stated on CNBC "Street Signs Asia" on Thursday that the market was not taken aback by the deflation numbers because the deflationary pressures have been present for over a year, and are now being passed downstream.

The substantial oversupply of pork in China's staple meat has resulted in a 17.3% decline in pork prices in January compared to the same month last year, after authorities aggressively restored supply in the last two years following a battle with swine flu.

Overall, food prices declined 5.9% in January from a year ago.

The Bureau of Statistics announced that Core CPI, which excludes energy and food prices, increased by 0.4% in January compared to the same month last year. This represents a 0.3% growth on a monthly basis from December, according to the bureau.

The high base effect of the Lunar New Year, which fell in January a year ago, influenced January's inflation data, according to NBS. This year, the festival falls in February.

The inflation print on Thursday highlighted the lingering fears that China is on the brink of deflation, as tepid prices reflect the "tortuous" economic recovery after the country emerged from its strict zero-Covid curbs at the end of 2022.

Despite being among the world's major economies, China is the only one facing stubbornly high inflation. Recent surveys of manufacturing activity indicate that growing competition has reduced the bargaining power of Chinese companies, resulting in lower output prices.

The Chinese economy has experienced a decline in consumer confidence and broader growth due to a property market slump resulting from Beijing's crackdown on developers' excessive debt-driven growth in 2020.