China's Inflation Rises Slightly; Producer Price Inflation Weakest In 13 Months

China's inflation rose less than expected in December and producer prices logged its weakest growth in more than a year as government stepped up measures to tackle pollution.

Consumer price inflation rose moderately to 1.8 percent from 1.7 percent in November, the National Bureau of Statistics reported Wednesday. The rate was forecast to rise to 1.9 percent.

Food prices fell 0.4 percent, following a 1.1 percent decrease in November. Meanwhile, non-food prices rose at a slightly slower pace of 2.4 percent.

For the whole year of 2017, inflation was 1.6 percent, which was well below the government's target of around 3 percent.

Producer price inflation slowed to 4.9 percent in December from 5.8 percent in November, the NBS said in a separate communique. This was the slowest increase since November 2016. The expected rate was 4.8 percent.

In 2017 as a whole, producer prices gained 6.3 percent.

Looking ahead, Julian Evans-Pritchard, an economist at Capital Economics, said inflation will continue to drop back in the coming quarters as economic activity softens.

With a further decline in producer price inflation, which is highly correlated with earnings growth among indebted industrial firms, will help push the People's Bank of China to ease monetary policy over the course of this year, the economist added.