Millennium Post

China inflation declined to 5-year-low of 0.8% in Jan

China’s inflation plunged to a more than five-year low of 0.8 per cent in January, official data showed on Tuesday, fuelling fears the world’s second-largest economy is on the brink of a deflationary spiral.

The rise in the consumer price index (CPI) was sharply down from the 1.5 per cent recorded in December, and was the weakest since 0.6 per cent recorded in November 2009, according to the National Bureau of Statistics. It was also short of the median forecast of 1.0 per cent in a survey of analysts by Bloomberg News and came despite a surprise interest rate cut in November. Moderate inflation can be a boon to consumption as it encourages consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth.

Analysts warned of deflation in China, a key driver of global expansion, and urged Beijing to take more measures to boost the economy.
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