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China's inflation rises as virus outbreak pushes prices up

China's inflation rises as virus outbreak pushes prices up

Inflation data in the Chinese economy rose better than expected in January, as the outbreak of the deadly coronavirus has kept supply low compared to demand.

Data released by the National Statistics Office of China, Monday, revealed that inflation data rose better than expected in January, where the consumer price index soared 5.4 percent year-on-year in January, the fastest pace in more than eight years. Markets had estimated a 4.9 percent surge, noting that the previous was 4.5 percent.

Analysts have attributed the rise to the higher demand during the Lunar New Year, as well as the outbreak of the African Swine Fever that killed millions of pigs, and thereby yielded in higher pork prices.

On the other hand, China's producer price index rose 0.1 percent from a year earlier, in line with forecasts, following six straight months of contraction as December’s reading was -0.5 percent.

The increase in producer prices were largely due to the improved activity in the industrial sector at the end of last year as a result of the U.S.-China trade agreement and the Chinese government incentives to boost the economy.

However, the improvement is not expected to continue for a long time as the coronavirus outbreak may weigh on the world’s second-biggest economy.

The number of infected cases has exceeded 40,000 and deaths from Coronavirus has surpassed 900, more than the number of SARS deaths, which adds to concerns that coronavirus is the next epidemic.

In Japan, the number of infected cases rose to about 66, by the same pace the number of infected cases also increased in the United Kingdom and Singapore, while more than 3,000 cases recovered from the disease.

Asian Stocks

Asian stocks saw a mixed performance at the close of trading on Monday, where Hong Kong Hang Seng Index decreased by 0.59 percent to 27,241.34, while the Shanghai Composite Index was closed at 0.51 percent increase at 2,890.49.

Australia S&P/ASX 200 finished 0.14 percent down at 7,012.53 and South Korea’s Kospi index descended by 0.49 percent to 2,201.07.

In Japan, Nikkei 225 index slumped 0.60 percent to 23,685.98 points.

Meanwhile, the dollar index, which measures the performance of six major currencies against the US dollar, rose by 0.01 percent at 98.57, the highest since June 2017.

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