Bankinter | The CPI in China moderates to 0.2% year-on-year against 0.4% expected and 0.8% previously, while Industrial Prices accelerated to negative 1.4% against -1.5% expected and -1.9% previously.
Analysis team’s view: Negative impact. Inflation moderates more than expected, although it is distorted by a base effect comparing January 2025, when Chinese New Year was celebrated, versus January 2026, when there was no such holiday as this year it begins on Sunday 15 February. On the other hand, industrial prices improved more than expected thanks to the rally in commodities such as gold and other metals, as China is one of the main places where these are processed and refined. Even so, China finds itself in the complex situation of avoiding deflation, with production prices in negative territory for 40 consecutive months. Although headline inflation has gradually improved in 2025, it closed the year at 0.0%, the lowest figure since 2009. The outlook is not very optimistic, with weak domestic demand and excess production capacity. We estimate that prices will gain some traction to reach 0.8% by the end of this year.
