China's January Inflation Data Shows Moderated CPI Growth, Narrowing PPI Decline

Headline Inflation Moderates Amidst Holiday Timing and Energy Price Shifts

China's consumer price index (CPI), a primary gauge of inflation, increased by 0.2 percent year-on-year in January 2026, according to official data released by the National Bureau of Statistics (NBS) on Wednesday, February 11, 2026. This figure represents a moderation from the 0.8 percent gain recorded in December 2025 and fell below market expectations of a 0.4 percent rise.

NBS statistician Dong Lijuan attributed the softer year-on-year CPI growth primarily to base effects related to the timing of the Spring Festival holiday. The holiday fell in January 2025, creating a higher comparison base, whereas in 2026, it occurs in February. Additionally, a significant 5.0 percent year-on-year drop in energy prices contributed to the moderation, subtracting approximately 0.34 percentage points from the headline CPI.

Food Prices Decline, Core Inflation Shows Recovery

Food prices experienced a 0.7 percent year-on-year decline in January, marking the first fall in three months and reducing the CPI by about 0.11 percentage points. Within this category, pork prices saw a notable decrease of 13.7 percent, and egg prices fell by 10.6 percent. Conversely, fresh vegetable and fruit prices recorded increases of 6.9 percent and 3.2 percent, respectively, though these were smaller gains.

Despite the overall moderation in headline inflation, underlying consumer demand showed signs of recovery. The core CPI, which excludes volatile food and energy prices, rose by 0.8 percent year-on-year. On a month-on-month basis, the core CPI increased by 0.3 percent, marking its fastest pace in nearly six months. Dong Lijuan noted that 'consumer demand continued to recover' and that 'the trend of moderate growth in core CPI remains unchanged.'

Producer Price Index Decline Narrows Significantly

Meanwhile, China's producer price index (PPI), which measures factory-gate costs, saw its year-on-year decline narrow to 1.4 percent in January 2026. This is an improvement from the 1.9 percent dip observed in December 2025 and was slightly better than the market consensus of a 1.5 percent fall. This marks the 40th consecutive month of contraction for the PPI, yet it represents the mildest decline since July 2024.

On a month-on-month basis, the PPI rose by 0.4 percent in January, accelerating from a 0.2 percent rise in December and representing the highest sequential PPI increase since September 2023. This narrowing decline is partly attributed to stronger demand in sectors such as

• semiconductor materials
• external storage devices linked to the artificial intelligence industry
• ceremonial goods manufacturing
• agricultural product processing ahead of the Chinese New Year

. Additionally, efforts to foster a unified national market contributed to price increases in industries like cement manufacturing and photovoltaics.