BEIJING (Reuters) – China’s January factory gate prices fell more than economists expected, suggesting that flashes of domestic demand that had stoked consumer prices after the zero-COVID policy ended are not yet strong enough to rekindle upstream sectors.

The producer price index (PPI) was down 0.8% on a year earlier, extending the 0.7% drop the prior month and faster than the 0.5% fall tipped in a Reuters poll.

The consumer price index (CPI) in January was 2.1% higher than a year earlier, up on the 1.8% annual gain seen in December, data from the National Bureau of Statistics (NBS) showed on Friday, but just shy of the 2.2% increase economists had predicted in a Reuters poll.

Economists expect the cost of living in China will pick up over the coming months, with inflation approaching the target of about 3% that the government set last year.

(Reporting by Joe Cash; Editing by Jacqueline Wong)