China’s inflation plunged to 0.8 per cent in January, its lowest level for more than five years, heightening fears of deflation in the world’s second-largest economy.

The rise in the consumer price index was sharply down from the 1.5 per cent recorded in December, and was its weakest since November 2009 when it stood at 0.6 per cent, according to figures provided by the National Bureau of Statistics.

Moderate inflation can be a boon to consumption as it encourages consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth.

The fall in CPI was driven by tumbling international crude prices and warmer January temperatures than average, causing vegetable, fruit and aquatic product prices to fall, senior NBS analyst Yu Qiumei said in a statement.

Separately, the producer price index (PPI) – a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI – declined for the 35th straight month in January.

The 4.3 per cent year-on-year PPI fall was the biggest since October 2009. The last time PPI rose was three years ago.