China's producer prices rose at their slowest pace in 13 months in December, as the government's war against winter smog dented factory demand for raw materials in a sign the world's second largest economy has started to slow.
China's producer price index rose 4.9% in December from a year earlier, the slowest growth since November 2016, the National Bureau of Statistics (NBS) said.
That was slightly faster than the 4.8% in a Reuters poll of analyst but much weaker than the 5.8% pace seen in November.
The data also showed consumer inflation accelerating less than expected and remaining well within the central bank's comfort zone.
Analysts say the year-on-year slowdown in producer price inflation was due partly to a high base last year with price gains in raw materials falling from their peaks.
It also supports the view that a softening in the economy has started in the last few months.
Today's data shows producer price increases slowing for the second month in a row in December, which follows a modest recovery in prices seen in the third quarter of last year.
A government crackdown on smog in the heavily industrialised northern provinces this year has hit demand for raw materials and continued curbs on the housing market have weighed on property investment.
While pollution curbs have had a disinflationary effect on producer prices, the resulting supply disruptions have in some segments added upward pressure to prices.
On a month-on-month basis, the PPI rose 0.8% in December, beating November's 0.5% increase, due to temporary disruptions caused by the pollution curbs.
The production restrictions at factories have triggered fears of supply shortages, giving a major boost to iron ore and steel futures prices and helping to offset tepid demand during winter months as construction activities slow.
Raw material prices rose 8.1% in December year-on-year, slowing from the 9.7% increase in November, data from the statistics bureau showed.
China's industrial firms reported seven-month low earnings for November as demand and producer price gains eased, adding more pressure on companies saddled with debt.
In December, consumer inflation accelerated less than expected to 1.8% from a year earlier compared to 1.7% in November. The consumer price index (CPI) had been expected to edge up to 1.9%.
The food price index declined 0.4% in December after falling 1.1% in November. Non-food prices rose 2.4%, compared with 2.5% in November.
Core inflation, which strips out volatile food and energy prices, slowed to 2.2% from 2.3% a month earlier.
China's economy is expected to have posted growth of 6.8% in 2017, up slightly from the previous year, supported by a construction boom and robust exports.