Chinese shares closed higher on Monday, buoyed by stronger-than-expected inflation data for January, which offset concerns about persistent deflationary pressures at the producer level.

The Shanghai Composite Index, the main gauge of Chinese stocks, added 0.6%, or 18.50 points, to finish Monday's session at 3,322.17. The Shenzhen Component Index edged up 0.5%, or 55.24 points, to 10,631.25.

January's consumer price index (CPI) rose 0.5% year-on-year, the fastest pace in five months, according to data released by the National Bureau of Statistics. This figure surpassed the 0.4% growth forecast by economists polled by Reuters. The CPI increase provided a positive signal for the market, suggesting strengthening consumer demand.

However, the positive CPI data was contrasted by the continued decline in the producer price index (PPI), which fell 2.3% year-on-year, matching the December figure. While slightly better than the 2.1% drop predicted by Reuters analysts, the persistent negative PPI readings indicate ongoing challenges in the manufacturing sector.

In corporate news, Dongfeng Automobile (SHA:600006) surged 10% even as its parent company, Dongfeng Motor Group (HKG:0489), announced reorganization plans that could lead to changes in its indirect controlling shareholder.

Shenzhen Das Intellitech (SHE:002421) jumped 7.1% after securing a 77.4-million-yuan contract for an intelligent systems project at the Guangzhou University of Chinese Medicine Shunde Hospital in Foshan, Guangdong province. These individual stock performances contributed to the overall positive market sentiment.