Data published by the National Bureau of Statistics (NBS) showed that consumer prices rose moderately in February, recording the first increase in six months, and exceeding economists' forecasts due to spending linked to the Lunar New Year. However, the drop in producer prices unexpectedly accelerated in February.
According to the report, the CPI increased by 0.7% per annum, almost offsetting the 0.8% drop in January. Economists had expected an increase of 0.3%. NBS said prices for some key food items, such as pork and fresh vegetables, as well as travel expenses increased in February amid seasonal excitement around the Lunar New Year. On a monthly basis, consumer price growth accelerated to 1% from 0.3%. Consensus estimates suggested an increase of 0.7%.
The data also showed that producer prices fell by 2.7% per annum, accelerating compared to January (-2.5%), and exceeding economists' forecasts (-2.5% per annum). It was the 17th straight month of contraction in factory gate prices.
Overall, the risk of deflation due to continued weak demand remains one of the main drags on China's overall growth. Last week, China's prime minister announced an ambitious economic growth target of about 5% in 2024. He also set an inflation target for 2024 at 3%, in line with targets set since 2015. In 2023, consumer prices rose by 0.2%, missing the government's target.