China inflation: consumer prices set to edge up amid reopening despite ‘puzzling’ fall in February
- China’s consumer price index (CPI) rose by 1 per cent in February, year on year, while the producer price index (PPI) fell by 1.4 per cent
- Decline in China’s consumer prices last month was broad-based, as both food and non-food inflation fell, while factory-gate prices stabilised, analysts explain
After its somewhat perplexing slowdown in growth last month, consumer inflation in China is expected to edge up over the coming months, in line with the nation’s economic recovery following its zero-Covid exit, according to analysts who say weak demand and falling food prices cooled costs in February.
The large decline in CPI inflation was broad-based, analysts said, as both food and non-food inflation fell by 2.6 per cent and 0.6 per cent, respectively, last month.
Factory-gate prices also stabilised last month following falls in December and January, as the headline producer price index (PPI), which reflects the prices that factories charge wholesalers for products, remained unchanged month on month in February, although fell by 1.4 per cent, year on year, down from a fall of 0.8 per cent in January.
“Factory-gate prices stopped falling last month, as China’s reopening helped put a floor under global commodity prices. Meanwhile, consumer price inflation dropped back sharply due to a fall in food prices and some residual seasonality,” said Julian Evans-Pritchard and Zichun Huang, China economists at Capital Economics.