China's annual consumer inflation hovered at a near five-year low of 1.5 percent in December, signalling persistent weakness in the economy but giving policymakers more room to ease policy to support growth.
The world's second-largest economy still faces formidable headwinds this year as a property market downturn persists and local governments and companies are struggling to repay debt.
"Deflation this year is definitely a risk," said Minggao Shen, economist at Citi in Hongkong.
"We continue to argue that deflation provides more room for policy easing. Our best-case scenario is still two more rate cuts in the first half of this year and maybe three to four reserve requirement ratio cuts this year."
Analysts polled by Reuters had expected annual consumer inflation to be 1.5 percent in December, compared with 1.4 percent in November.
The consumer price index rose 0.3 percent in December from November, the National Bureau of Statistics said on Friday, in line with economists' expectations.