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China factory-gate inflation hits 5.5% in December

BEIJING, Jan 10, 2017 (BSS/AFP) - China's producer prices rose at their swiftest pace in more than five years in December, the government said Tuesday, in a positive sign of strengthening demand for the world's second-largest economy.

The producer price index rose 5.5 percent year-on-year last month, the National Bureau of Statistics said, far more than economists' expectations of 4.6 percent in a Bloomberg News survey.

It marked an acceleration from the previous three months and fuelled expectations China could begin exporting inflation into the global economy, though uncertainty hangs over the outlook as trade tensions may surge under incoming president Donald Trump.

The consumer price index, a key gauge of retail inflation, rose 2.1 percent year-on-year in December, slightly below expectations.

China is the world's biggest trader in goods, and its performance affects partners from Australia to Zambia, many of which have been mired in tepid inflation for years, which has in turn caused a drag on the global economy.

Chinese firms have been battered by falling prices for their goods in the face of chronic overcapacity and weak demand, putting a damper on growth in the country.

Protracted falls in factory gate prices are a bad sign for industrial prospects and economic growth because they put off customers -- who seek to delay purchases in anticipation of cheaper deals in the future -- starving companies of business and funds.