China's producer price index (PPI), which measures inflation at the wholesale level, fell 1.6 percent year on year in January, the National Bureau of Statistics said on Friday.
The drop marked the 11th straight month of declines after the PPI dropped in March 2012 for the first time since December 2009.
The decline was smaller than the 1.9-percent decrease registered in December and the 2.2-percent decrease seen in November, indicating that the economy's growth is stabilizing, analysts said.
On a month-on-month basis, the PPI reversed a dropping trend to grow 0.2 percent in January, according to the bureau.
The data came along with the consumer price index, a key gauge of inflation, which grew 2 percent year on year in January, down from 2.5 percent in December, due to a lower comparison base from last year.