China’s inflation rises by 1.4% in February

China’s inflation rises by 1.4% in February .

The CPI ( consumer price inflation ) data compares with a increase of 0.8 percent in Jan , which was the weakest reading since November 2009.

China’s new consumer inflation target is about 3 percent , down from 3.5 percent in 2014.

This increase in inflation for this time was attributed by officials to China’s Lunar New Year celebrations.

The official number can ease some deflation worries for China – the world’s second-largest economy , although analysts were unconvinced the holiday period was a factor for the year-on-year rise.

Economist Dariusz Kowalczyk from Credit Agricole in Hong Kong said : “The statistical office said China’s  Lunar New Year was the reason behind higher inflation, though we know this explanation is not sufficient given that last year Lunar New Year was also in February,”

“In some case , this data confirms  that there will be no further rate cuts considering that the [reserve bank] said it was managing real rates and these are much lower now with higher inflation,” he said.

The PPI ( producer price index ) , which includes wholesale and factory price inflation, showed worsening deflation, reduce 4.8 percent in Feb  and highlighting persistent weakness in the economy.

Expectations were for a fall of 4.3 percent, in line with Jan’s data. China has now seen factory price deflation for some three years.

Excess at factories is believed to be contributing to deflation, together with a downturn in the property market.

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Persistent weakness

China inflation

China’ consumer inflation rose 0.8 percent  in Jan , its weakest reading since November 2009
Earlier this month, China’s Premier Li Keqiang said the government would have a consumer inflation target of about 3 percent , down from 3.5 percent  in 2014.

Inflation data for Jan , which hit a five-year low of 0.8 percent , had shown that overall inflation pressures in China- the world’s second-largest economy remain weak, Moody’s Analytics economist Alaistair Chan said in a note.

Mr Chan said : “Disinflation is apparent across most categories, ranging from food to housing to household goods,” .

“Consumer prices have been moderating because of the housing slump and general overcapacity in many industrial sectors [and] lower oil prices are also lowering retail energy costs.”

“The economy would face greater difficulties this year, compared to the previous one ” – Premier Li said

The world’s second-largest economy – China , has set its growth target at about 7 percent for this year, down from a target of 7.5 percent in 2014.


China’s inflation rises by 1.4% in February
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