China's Producer Price Index (PPI), a main gauge of inflation at the wholesale level, rose 1.7 percent in December year-on-year, the National Bureau of Statistics (NBS) said Thursday.

The reading eased further from November's 2.7-percent growth, the NBS said in a statement on its website.

On a month-on-month basis, China's December PPI fell 0.3 percent from November, the NBS said.

Producer purchase prices grew 3.5 percent year-on-year in December and were down 0.4 percent from a month ago, said the NBS.

The full-year PPI climbed 6 percent year-on-year in 2011, while producer purchase prices rose 9.1 percent from a year earlier.

Analysts expect the pullback to ease temporarily, as upcoming holiday demand will drive prices higher in the short term, although the downward trend is likely to last amid the global economic downturn.

"As long as there is not a significant easing of China's monetary policy, the downward trend will not change," read an analysis by Bocom International.

Analysts warned that any change in market sentiment will influence the trend.

"Though investors' confidence remains low, possible government measures to spur the economy could boost prices at all levels," said Chen Kexin, an analyst with the distribution productivity promotion center of China Commerce.