(Yicai) Jan. 12 -- China's consumer and factory gate prices both declined at a slower pace last month, according to the latest official data.

The consumer price index fell for the third straight month in December, dipping 0.3 percent from a year earlier, the National Bureau of Statistics said today. November’s 0.5 percent drop was the steepest in three years.

The core CPI, which excludes food and energy prices, rose 0.6 point. The cost of foodstuffs, including pork, and cars declined, while that of accommodation and travel increased. 

Ample pork supplies meant prices were weak, said Zhang Yu, chief macro analyst at Huachuang Securities. Falling international crude oil prices resulted in a 4.2 percent drop in the retail cost of gasoline, Zhang noted, adding that these were the main reasons the CPI fell last month.

Goods prices will remain at a low level in the short term, said Bruce Pang, chief economist at Jones Lang LaSalle China, but in the medium term, the CPI will return to a normal level above last year’s as macro policies are strengthened, demand picks up, and supply-side fluctuations weaken.

The CPI ran at a low level throughout 2023, but should recover to some extent this year, said Li Chao, spokesperson at the National Development and Reform Commission.

Factory Gate Prices

The producer price index fell for the 15th month in a row in December, declining 2.7 percent from a year ago, according to the NBS, slowing from a 3 percent drop in the previous month.

The decline was mainly due to falling domestic and international oil prices and the drag on the economy from the real estate sector, said Wu Chaoming, deputy dean at the Chasing Institute.

But the PPI is expected to rebound this year because of the low base effect, rising oil prices, and policies to stimulate demand, Wu noted.

Production costs fell 3.3 percent in December versus 3.4 percent in November, the data showed. Meanwhile, the cost of the means of production fell 1.2 percent, unchanged from the prior month.

Prices in the non-metallic mineral products, metal smelting, chemical raw materials, chemical product manufacturing industries fell between 1.6 percent and 7.9 percent. Those of the petroleum, coal, and other fuel processing sectors also contracted to various degrees.

Editors: Shi Yi, Futura Costaglione