China's producer price index increased 0.9 percent from a year earlier in December 2018, much slower than a 2.7 percent rise in the previous month and missing market expectations of 1.6 percent. It was the lowest producer inflation since September 2016, as prices of means of production went up at a softer 1.0 percent (vs 3.3 percent in November), in particular raw materials (0.8 percent vs 4.6 percent), processing (0.8 percent vs 2.2 percent) and extraction (3.8 percent vs 9.2 percent). Also, consumer goods inflation edged lower to 0.7 percent from 0.8 percent, of which food production (0.9 percent vs 1.1 percent), clothing (1.6 percent vs 1.5 percent) and daily use goods (0.4 percent vs 0.8 percent). Cost of consumer durable goods went up 0.2 percent (vs 0.1 percent in November). On a monthly basis, producer prices fell 1.0 percent in December, after a 0.2 percent drop in November. For full 2018, the producer price index rose 3.5 percent, easing from a 6.3 percent advance in 2017. Producer Prices Change in China averaged 1.31 percent from 1995 until 2018, reaching an all time high of 13.47 percent in July of 1995 and a record low of -8.20 percent in July of 2009.
Producer Prices Change in China is expected to be 3.90 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Producer Prices Change in China to stand at 3.80 in 12 months time. In the long-term, the China Producer Prices Change is projected to trend around 5.50 percent in 2020, according to our econometric models.