Chinese inflation slowed further in January as activity in the world's third-largest economy weakened, government data shows today, with economists warning deflation was imminent.
The consumer price index, the main gauge of inflation, was 1% in January, down from 1.2% in December, the National Bureau of Statistics said today.
Inflation was dropping speedily towards zero on a mixture of precipitous declines in global crude prices and a lack of momentum at home, economists said.
In an ominous sign of things to come, producer prices, which measure trends at the wholesale level, fell by 3.3% in January, the state-run Xinhua news agency said.
The key figure that analysts look at in most economies is core inflation, which does not include food and energy prices, because they are considered too volatile.
China does not have a precise equivalent to core inflation, but the index that comes closest - for non-food prices - was down 0.6% in January from the same month a year ago.
China started 2008 with rapidly rising inflation, and the consumer price index hitting a near 12-year high of 8.7% in February.
Leaders in Beijing made inflation control the top objective in the first half of last year, but priorities changed as the global economic crisis started having an impact.
Food prices were a major factor behind the spike in inflation at the start of 2008 but costs began to fall in the second part of the year.
There was continued relief for consumers in January. Although food inflation stood at 4.2% in January, the price of pork, the most important meat in China, was down by 13.3%.
China's economy grew by 9% in 2008, slipping back into single digits for the first time in six years, with expansion in the final quarter just 6.8%.
