Fastest rise in inflation since 2014
Print Edition
CHINA’S inflation growth accelerated to a 19-month high in February due to food costs and seasonal factors, exceeding market expectations and helping to ease deflationary pressure.
The Consumer Price Index, the main gauge of inflation, grew 2.3 percent from a year earlier last month, up from January’s increase of 1.8 percent, the National Bureau of Statistics said yesterday. It was the fastest rise in inflation since July 2014.
Food prices, which account for nearly a third of the CPI basket, added 7.3 percent in February, compared to January’s 4.1 percent and December’s 2.7 percent rises.
Prices in the non-food sector rose 1 percent compared to January’s 1.2 percent.
Yu Qiumei, a bureau researcher, said seasonal factors and extreme weather in February had affected food supplies, pushing up prices. Fresh vegetables climbed 30.6 percent year on year last month, the fastest rise in nearly eight years. Meat and meat products rose 15.1 percent in prices, while pork prices were up by 25.4 percent.
Liu Ligang, chief China economist at Australia & New Zealand Banking Group Ltd, said: “As the rise in food prices is likely temporary, inflation may remain mild in the coming months. Daily wholesale food prices show that prices have moderated slightly in early March, and moderating growth in the non-food sector reflected disinflation in the other components of the CPI.”
Since January, consumer inflation has been based on a new comparison base that takes into account new products and services. The adjustment gave less weight to products such as tobacco and liquor, and more to housing and medical services.
Liu said that without the adjustment inflation would have been at least 0.2 percentage points higher in February.
Tom Rafferty, Asia economist at the Economist Intelligence Unit, said downward pressure on prices is gradually easing in China.
“It is true that the acceleration in consumer price inflation in February reflects a spike in seasonal demand over the Chinese New Year. However, in January and February as a whole the CPI still rose by an average of 2 percent, pointing to firmer inflationary pressures than last year,” Rafferty said.
China has been watching out for deflationary pressures over the past year due to slowing economic growth and continued falls in producer prices.
The Producer Price Index, a measurement of inflation at the factory gate and a harbinger for future prices at the consumer end, declined 4.9 percent in February. It recovered further from the contraction of 5.3 percent in January but the negative stream still extended for a 48th consecutive month.
Qu Hongbin, chief economist for China at HSBC, attributed easing contraction of the PPI to stabilizing commodity prices.
China’s trade slumped more than expected in February, with exports sliding 20.6 percent year on year and imports losing 8 percent. Deterioration was also spotted in manufacturing and services.
China has announced a growth target of between 6.5 percent and 7 percent for this year.
In the final quarter of last year, China’s gross domestic product grew 6.8 percent, which concluded 2015 with a growth rate of 6.9 percent, the slowest annual expansion in a quarter of a century.
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