China's annual consumer price index hit a five-year low in January while factory deflation worsened, underscoring deepening weakness in the economy and heaping pressures on policymakers to inject more stimulus to underpin growth.
The risk of deflation is rising for the world's second-largest economy as a property market downturn and widespread factory overcapacity have been compounded by an uncertain global outlook and falling commodity prices.
The data showed producer price index dropped 4.3% in January from a year earlier, worse than a 3.8% fall expected by analysts and extending factory deflation to nearly three years. Price cuts have sapped profitability of Chinese manufacturers.
Experts expect the People's Bank of China bank to cut interest rates around March and April to support the economy.
The central bank is widely expected to loosen policy further after cutting bank reserve requirements last week for the first time in over two years, seen as a mostly defensive move against capital outflows.
A collapse in global oil prices have already unleashed a wave of weakenings around the world as central bankers from Europe to Canada to Australia sought to defuse the deflationary pressures and bolster their economies.
And more policy support is expected from Beijing after the National Bureau of Statistics said on Tuesday that China's consumer price index rose 0.8% in January year-on-year, undershooting expectations of a 1% rise and marking the weakest reading since November 2009.
