China's central bank says the country needs to pay more attention to consumer prices. That's reason enough to see why inflation numbers are likely to be the highlight of Friday's data releases from the world's second biggest economy.
The Chinese economy is recovering from its worst yearly downturn in 13 years,raising some concerns that as the economy bounces back price pressures will start to rise.
The country's central bank said in a report released on Wednesday that China should pay more attention to consumer prices, with controlling inflation a priority. That marks a shift from its previous focus on growth.
"The inflation data are important - basically because there is a growing realization that inflation is starting to head upwards and there is a risk that China may start to unwind monetary easing sooner than expected," said Alistair Chan, an economist at Moody's Analytics in Sydney.
"The central bank came out yesterday (Wednesday) saying that inflation is a risk so I think the inflation numbers will be watched carefully this time," he added.
The Consumer Price Index in China rose to a seven-month high of 2.5 percent in December from a year earlier. Chan forecasts a rise of 2.2 percent in January, a slight easing from the December number, which Chan says was boosted by a base effect.
Analysts at Barclays also expect Chinese inflation to have accelerated 2.2 percent last month.
"We will focus on the CPI numbers and if inflation picks up that means stimulus could come off the boil," Jonathan Barratt, founder of the commodities market newsletter Barratt's Bulletin, told CNBC on Thursday.
Fiscal stimulus measures from China last year included a $150 billion-plus infrastructure spending package and incentives for exporters. The country's central bank meanwhile delivered two reductions in interest rates and the reserve requirement ratio for banks.
When it comes to what could fuel inflation in China, stimulus from regional governments or from the central government needs to be watched, said Lombard Street Research Economist Freya Beamish.
"We did see production in China ratchet up from the lows of the first half of last year and that could only have been driven by local government spending patterns," she said. "So, we have stimulus present and if we continue to see more of this, then inflation is likely to come back, but I don't think we're there yet."
Latest data shows industrial output grew 10.3 percent in December from a year ago, versus expectations of 10.1 percent.