China inflation eases in December

Inflation in China eased in December thanks to falling food and commodity costs, with analysts saying Wednesday's figures give policymakers room to unveil measures to kickstart the stuttering economy including interest rate cuts.

Like most other countries, China has seen prices surge for much of the past year owing to pick-up in the cost of energy, putting pressure on an economy also being battered by a crisis in the key, growth-driving property sector.

Factory price inflation has been particularly affected, hitting a 26-year high in October and raising concerns that those rises will filter through to the global economy owing to China's crucial role as an exporter.

But on Wednesday, figures showed producer prices rose a less-than-expected 10.3 per cent on-year last month, extending a slowdown seen in November.

The consumer price index (CPI), a key gauge of retail inflation, came in at 1.5 per cent -- down from 2.3 per cent in November and also short of forecasts.

"The probability of a rate cut in the first quarter is high, and the closest window is this month," Bruce Pang, at China Renaissance Securities Hong Kong, said.