China’s factory gate prices fell last month at their slowest pace since February, official data showed on Monday, suggesting the country’s manufacturing sector continues to see a rapid recovery from the COVID-19 shock.

The producer price index (PPI) eased 0.4 per cent from a year earlier, the National Bureau of Statistics said in a statement. The index was expected to decline by 0.8 per cent, according to a median forecast in a Reuters poll, after a 1.5 per cent drop in November. Monthly producer price index PPI rose at its fastest pace in four years.

Annual consumer prices meanwhile returned to growth last month, underpinned by a rebound in food prices, after falling in November for the first time in over a decade.

An impressive rebound in China’s industrial sector has helped the world’s second-largest economy post a robust recovery from the COVID-19 shock in early 2020.

The pace of recovery has led analysts to believe the People’s Bank of China (PBOC) could begin to unwind loose monetary policy, but governor Yi Gang said on Friday China will prioritise stability in monetary policy this year.

“With economic activity set to remain strong and underlying inflation likely to continue rising, we think the PBOC will tighten policy this year,” said Julian Evans-Pritchard, senior China economist, at Capital Economics.

The data comes as Chinese manufacturing activity expanded in December but at a slightly slower pace amid higher raw material costs.

Prices for raw materials fell 1.6 per cent from a year ago, compared with a decline of 4.2 per cent in the previous month, the data showed. PPI rose 1.1 per cent last month, the fastest pace since December 2016.

“Judging from the current significant rebound in global commodity prices, (annual) PPI could soon enter positive growth territory,” said Zhang Yongjun, analyst at China Centre for International Economic Exchanges.

Consumer prices rose in December due to higher food prices.

The consumer price index (CPI) increased 0.2 per cent from a year earlier, against expectations in a Reuters poll for a 0.1 per cent rise, and bringing full-year consumer price inflation to 2.5 per cent in 2020. The index had eased 0.5 per cent in November, the first fall since 2009.

Food prices rose as extreme cold weather drove the transportation costs of fresh vegetables and fruit higher while seasonal holiday demand drove up the prices of meat products, said Dong Lijuan, senior statistician with the NBS.

Food prices rose 1.2 per cent from a year ago, compared with a decline of 2.0 per cent in the previous month.

But some analysts say a slide in pork prices, driven by the replenishment of hog stocks, may weigh on consumer prices over the next couple of months.

China said on Monday it was set to approve the safety of another genetically modified (GMO) corn variety and a GMO soybean, both produced by Beijing Dabeinong Technology Group Co Ltd.

The move comes after China last year approved three domestically designed GMO crops as safe, the first in a decade, in a fresh push towards commercial planting of GMO crops in the world’s top soybean importer and a major corn buyer.

Beijing has never permitted planting of GMO soybean or corn varieties but it permits their import for use in animal feed.

The government has said recently, however, that it wants to support biotech breeding to boost food security, leading the industry to expect progress towards commercialisation in the coming year.

The Ministry of Agriculture and Rural Affairs has opened its plan for safety approval for public comment until Feb. 1.

One of the new products, a glufosate and glufosinate-resistant soybean known as DBN9004, has already been approved as safe in Argentina, where Dabeinong is also seeking commercial production.

The other, known as DBN9501, is a corn resistant to the fall armyworm pest, which last year reached China’s cornbelt region.

Dabeinong could not be reached for comment.

Though several further steps must be taken before farmers in China are allowed to plant the crops, the approval is seen as timely given a growing corn deficit in the world’s top grain grower.

“The arrival of GMOs can bring an increase in production efficiency,” said Mao Yifan, analyst at Industrial Securities.

The ministry also said on Monday it had approved two new GMO corn varieties for import, the glyphosate-resistant and insect-resistant MON87411 sold by Bayer’s Crop Science unit and MZIR098 produced by Syngenta.