Chinese inflation dropped to its lowest in 2½ years and the price of goods leaving factory gates fell 3.3 per cent in January, raising the prospect that the country will experience falling prices in coming months.

Consumer price inflation fell for the ninth month in a row to 1 per cent in January from 1.2 per cent the previous month as prices for clothing, transport and housing tumbled. The drop in prices charged by manufacturers underscored the weakness of the economy.