(Yicai Global) Feb. 10 -- China’s consumer prices increased at the fastest pace in three months in January because of the peak consumption season around the lunar new year holiday and the country’s easing of Covid-19 control measures.

The consumer price index rose 2.1 percent last month from a year earlier, compared with 1.8 percent in December, according to data the National Bureau of Statistics released today.

At the same time, factory gate prices fell for the fourth month in a row due to fluctuations in international crude oil prices and a decline the cost of domestically produced coal.

CPI growth was mainly due to Chinese New Year holiday spending and the general recovery in demand, Pang Ming, chief economist at US real estate services provider Jones Lang LaSalle’s China business, told Yicai Global, adding that inflation will likely remain moderate and manageable throughout the year.

Food prices accelerated to a three-month high of 6.2 percent, up from 4.8 percent in December, driven by a sharp upturn in fresh produce prices. Fresh mushroom and fruit prices went up 15.9 percent and 13.1 percent, respectively. Pork prices rose 11.8 percent, up from 1.4 percent a year ago.

In the non-food domain, service prices rose 1 percent on an annual basis, extending by 0.4 percentage point. With Covid-19 infections in various regions of China falling, service consumption rebounded sharply during the week-long lunar new year holiday, resulting in more trade and higher prices, China International Capital said in a research report.

Boosted by the holiday demand, the average wholesale price of 28 key vegetables surged 21 percent last month from December, but pork prices dropped 10.8 percent from a month earlier, due to the early release of reserves and stocks of the meat, the report added.

Meanwhile, producer prices fell for the fourth consecutive month in January, dipping 0.8 percent after a 0.9 percent decline the month before, the NBS data showed.

Bulk commodity prices rose significantly in January due to the waning pandemic, China’s active economic policies, and the slowdown in overseas interest rate hikes, Citic Securities said.

Strong demand supported a modest recovery in oil prices, while copper and rebar prices in the home market rose. But as production was crimped during the holiday, factory prices of industrial products may rise less than those of raw materials.

Major global energy and metals prices are expected to fall about 10 percent annually this year. Coupled with the gradual recovery in effective domestic social demand, this will keep average PPI growth rate at a low level of minus 0.5 percent to 0.5 percent, according to Pang.

Editor: Peter Thomas