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China’s factory gate inflation eases


A woman walks past a billboard praising Chinese patriotism on a street in Beijing on December 6, 2018. (Photo by FRED DUFOUR / AFP)

China’s factory inflation slowed in November, a sign demand remains weak amid Beijing’s ongoing trade war with the United States, while consumer inflation also flagged, official data showed Sunday.

The producer price index — an important barometer of the industrial sector that measures the cost of goods at the factory gate — climbed 2.7% on-year in November.

It ticked down from 3.3% the previous month, recording its weakest growth since October 2016, while remaining in line with the forecast in a Bloomberg News survey.

A slowdown in factory gate inflation reflects sluggish demand.

The consumer price index (CPI) — a key measure of retail inflation — rose 2.2% on-year, compared with 2.5% in October.

Food prices, up 2.5%, rose quicker than non-food prices, which were up 2.1%. Energy prices fell over the month.

“The broad moderation in inflationary pressures appears to be a reflection of weaker demand growth over the past half a year and should alleviate concerns about possible stagflation,” said Goldman Sachs Economic Research in a report.

The weak figures come as China’s trade war with the US continues to bite and its economy shows signs of slowing. The Asian giant recorded GDP growth of 6.5% in the third quarter — its weakest in nine years.

The growth of China’s trade with the rest of the world slowed last month, with exports up 5.4% and imports up 3% on-year — compared with 15.6% and 21.4% respectively in October.

Washington and Beijing announced a tariff truce at the start of December, to allow for trade negotiations by delaying a hike in new duties by 90 days.

The US suspended its plans to raise tariffs on $200 billion in Chinese imports to 25 percent beginning January 1, leaving them at the current 10 percent rate.

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