BEIJING, Feb 6 (Reuters) - China's annual consumer price inflation was in line with expectations in January, easing from December's seven-month high, with most economists seeing price pressures bottoming out in January.

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KEY POINTS:

Jan CPI +2.0 pct y/y (forecast +2.0 pct, Dec +2.5 pct)

Jan PPI -1.6 pct y/y (forecast -1.6 pct, Dec -1.9 pct)

COMMENTARY:

NIE WEN, ANALYST, HWABAO TRUST, SHANGHAI:

'The CPI data is mainly driven by rising food prices. We expect CPI may reach 3 percent in February due to the Lunar New year.

'I expect consumer inflation would keep a mild upward trend this year thanks to China's reviving economy.'

YAO WEI, ECONOMIST, SOCIETE GENERALE, HONG KONG:

'The decline in the headline CPI seems to be due to base effects, but the underlying inflation trend seems to be on the rise. Look at food prices, which rose sharply month-on-month. This is also seasonal, but if you adjust it, it does show that inflationary pressure is coming back.'

CONNIE TSE, ECONOMIST, FORECAST PTE, SINGAPORE:

'A lower inflation headline number may offer the market hope that there is still room for monetary easing through OMO to help support the economic recovery momentum.

'That said, it will be good to keep an eye on demand-side price pressures from the domestically driven recovery, especially regarding asset inflation.'

LINKS:

For details, see the website of the National Bureau of Statistics at http://www.stats.gov.cn

MARKET REACTION:

The CSI300 Index of leading shares in Shanghai and Shenzhen was up 0.9 percent in afternoon on Friday. The Chinese yuan was trading at 6.2319 per dollar.

BACKGROUND:

-- China's inflation has fallen steadily from a three-year peak of 6.5 percent in July 2011 in response to a series of policy tightening steps and weakening economic activity.

-- The central bank has said that China's inflation trend is stable, but the country needs to guard against imported price pressures stemming in part from ultra-loose U.S. monetary policy.

-- The Chinese Academy of Social Sciences has revised up revised up its forecast for 2013 inflation to 3.5 percent, from its previous outlook of 3.0 percent.

(Reporting By China Economics Team) Keywords: CHINA ECONOMY/CPI

(xiaoyi.shao@thomsonreuters.com)(+8610-66271221)(Reuters Messaging: xiaoyi.shao.thomsonreuters.com@reuters.net)

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