The cost of producing goods in China's factories slowed sharply in December, a sign demand remains weak as the US trade war drags on, while consumer inflation also flagged, official data showed Thursday. The producer price index (PPI) - an important barometer of the industrial sector that measures the cost of goods at the factory gate - rose 0.9 percent on-year in December, compared with a 2.7 percent rise the previous month.

The reading marks the lowest growth since September 2016, and fell short of forecasts in a Bloomberg News survey.

A slowdown in factory gate inflation reflects sluggish demand, while a turn to deflation could dent corporate profits.

It "may enter negative territory very soon given the negative sequential growth it already recorded", Goldman Sachs economists forecast.

Copyright Agence France-Presse, 2019