China's inflation fell to 2.5% on year in December from 3% in November and came in below forecasts of 2.7%.
On month, CPI +0.3% vs -0.1% and +0.4%.
PPI dropped for the 22nd month in a row - the longest streak since the 1990s - declining 1.4% on year, as in November, and vs consensus of -1.3%.
For the year, inflation was 2.6%, well below the government's target of 3.5%; along with the latest fall, that could ease fears about how much the central bank will tighten monetary policy.
"Inflation pressures remain modest, which will allow policymakers to continue focusing on policies to support growth while implementing structural reform measures in 2014," says HSBC economist Xiaoping Ma.
Shanghai Composite -0.8%.