Explainer | China inflation: 4 takeaways from February data as consumer prices turned positive, but factory activity remained subdued
- China’s consumer price index (CPI) rose by 0.7 per cent in February, year on year, ending a run of four consecutive months of decline
- Producer price index (PPI) fell for the 17th month in a row, dropping by 2.7 per cent in February from a year earlier
1. Lunar New Year holiday boosts CPI
Analysts said the turnaround - reflected in official data released on Saturday - was due to temporary factors, such as volatility in food and tourism prices around last month’s Lunar New Year holiday.
“Markets were looking for a boost from food prices due to the Lunar New Year, but overall, food prices remained in negative growth for the seventh consecutive month at minus 0.1 per cent, year on year, despite an uptick in pork and fresh vegetable prices,” said analysts at ING.
China has set its CPI inflation target at 3 per cent for all of 2024 after prices rose merely 0.2 per cent across 2023.
In month-on-month terms, the CPI reading grew in February by 1 per cent, outpacing a 0.3 per cent monthly uptick in January.
Data for January and February showed that the CPI remained unchanged from the same period last year. The figures for January and February are combined to smooth out the impact of the Lunar New Year holiday, which falls at different times during the two months in different years.
