Chinese inflation remains tame


China's CPI held steady at +2.5% on year in January, although the reading exceeded expectations of +2.3%.

Beef and vegetable prices increased while pork declined.

On month, CPI accelerated to +1% from +0.3% in December and topped consensus of +0.7%.

Factory-gate prices dropped for the 23rd consecutive month, falling 1.6% on year vs -1.4% and -1.7%.

PNC economist Bill Adams says the strength of the yuan against other emerging-market currencies has been helping to keep Chinese inflation down, although that strength "is another headwind for manufacturing."

The benign inflation could give the People's Bank of China room to loosen monetary policy should the economy slow further, although the PBOC is also concerned about reining in soaring debt. "Inflation is one target for the central bank, but financial stability is a bigger concern," says JPMorgan economist Haibin Zhu.

The Shanghai Composite is +0.8%. (PR)

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