ExplainerChina 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

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China’s producer price index (PPI) fell in February for the 17th month in a row, dropping by 2.7 per cent from a year earlier. Photo: AFP

Published: 1:46pm, 11 Mar 2024Updated: 1:52pm, 11 Mar 2024

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1. Lunar New Year holiday boosts CPI

China’s consumer price index (CPI) turned positive for the first time since September after growing in February by 0.7 per cent, year on year, compared with a fall of 0.8 per cent in January.

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.