Consumer prices last year rose by just 1.6 %, well below the government's target ceiling of 3 %. In December, the 12-month rise in consumer prices was 1.8 % y-o-y. Core inflation, which omits changes in energy and food prices, was 2.2 % in 2017. Upward pressure on prices last year was provided by higher prices for services and fuel. Food prices fell slightly.
Spurred by higher prices for commodities and the improved fortunes of extractive industries, producer prices rose by 6.3 % last year. The 12-month rise in producer prices began to fade towards the end of the year subsiding to just 4.9 % in December. The on-month rise, however, increased in every month of the second half of the year.
Price trends in China
Source: Macrobond, BOFIT