BEIJING, Jan 9 (AFP): Chinese inflation rebounded marginally in December, the government said Friday, but economists warned of deflationary threats and called for more monetary stimulus to boost slowing growth in the world's second-largest economy.
The consumer price index (CPI) rose 1.5 per cent year-on-year in December, the National Bureau of Statistics announced, matching market estimates and marking an increase from a five-year low of 1.4 per cent in November.
But for full year 2014, consumer inflation was 2.0 per cent, the bureau said, down from 2.6 per cent in 2013 and well below the government's target of about 3.5 per cent.
Also, the producer price index (PPI) -- a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI -- declined for the 34th straight month.
The 3.3 per cent year-on-year fall was larger than the 3.1 per cent median forecast in a Bloomberg News survey, and the biggest since September 2012. The last PPI increase was in January 2012.
Moderate inflation can be a boon to consumption as it encourages consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth.
"Authorities need to be vigilant on the rising risk of deflation," ANZ economists Liu Li-Gang and Zhou Hao said in a note after the data were released.
China's economy expanded 7.3 per cent in the third quarter of last year, the slowest since 2009 at the height of the global financial crisis, and has showed continued weakness in the fourth quarter.
"We believe the weak inflation data in December was mainly the result of falling commodity prices, worsening overcapacity in upstream industries and weak growth momentum," Nomura economists said in a note.
"We expect inflation to remain low in the coming months with concerns over deflation risks continuing to rise."
China announces fourth-quarter and annual growth figures on January 20.
The data suggest authorities will announce fresh monetary easing, the Nomura economists said, adding they expect the central People's Bank of China (PBoC) to cut interest rates in the second quarter of 2015 while lowering the amount of cash banks must keep on hand once in every quarter this year.
Reducing the reserve requirement ratio (RRR) increases the amount of money banks can lend out and help boost economic activity.
