MNI DATA IMPACT: China Dec CPI Edged Up; 2020 CPI +2.5%

China's inflation rose 0.2% y/y in December, bouncing back from the previous 11-year low of 0.5% fall and leading the CPI up 2.5% y/y for the year. The Producer Price Index, another key indicator measuring the factory gate prices, fell 0.4% on a yearly basis, helped by the ferrous and non-ferrous metal smelting and rolling industries, according to data released on Monday by the National Bureau of Statistics.

Here are the key takeaways:

• The CPI rose 0.2% year-on-year in December, pulling back the index from the last 0.5% y/y decrease, and beating the consensus for flat growth.
• Food prices increased 1.2% y/y, reversing part of November's 2.0% drop. The rise was driven by the increasing costs for production and transportation of fresh vegetables and fruits in cold weathers, as well as expanding consumer demands before the Chinese New Year holiday, the bureau said.
• Pork prices, the main inflation driver in the past year, slowed down the fall - dropping 1.3% y/y compared with the 12.5% y/y plunge last month. It is worth noting, however, that pork prices increased 49.7% y/y in the year 2020, marking the biggest surge among all items. Vegetable prices grew 6.5% y/y, or 8.5% m/m, due the rising transportation rates.
• Prices for clothing and residences fell 0.1% y/y and 0.6% y/y, respectively. Prices for household articles and services reported flat in the month while prices for recreation and education increased 0.9% y/y.
• The CPI grew 0.7% in December on a monthly basis, wiping off the 0.6% fall registered in the previous month.
• The PPI decreased 0.4% y/y in December, narrowing from the last 1.5% y/y drop, and outpacing the -0.8% y/y consensus. The declines registered in 11 consecutive months ended with the PPI falling 1.8% for the year 2020.
• The PPI grew 1.1% m/m in December, quicker from the 0.5% m/m reported last month, with prices in petroleum-related industries increasing due to rising crude oil prices.