China Inflation


Inflation hits 13-month low in February

In February, consumer prices expanded 0.5% over the previous month, which was down from the 1.0% increase tallied in January. The monthly increase mainly reflected higher prices for food and for housing. Annual inflation fell from 2.5% in January to 2.0% in February. The print slightly undershot the 2.1% that markets had expected and represented the lowest rate since January 2013. As a result, the trend sloped downward, with annual average inflation inching down from 2.7% in January to 2.6%. Analysts highlighted that while the decline in inflation partially reflects the timing of the Chinese New Year, which fell early in February this year instead of mid-month as in 2013, February's print suggests that inflationary pressures remain low. Meanwhile, the producer price index fell 2.0% in February over the same month last year (January: -1.6% year-on-year), which exceeded the 1.9% decline that market analysts had expected. Nevertheless, the annual average variation of the producer price index remained stable at January's minus 1.9%. At China's annual National People's Congress held in early March, Prime Minister Li Keqiang set a target for consumer price inflation of about 3.5% for 2014, the same goal as in 2013. FocusEconomics Consensus Forecast participants expect that inflation will average 3.1% in 2014, which is unchanged from last month's estimate. In 2015, the panel sees inflation rising to 3.2%.

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China Inflation Chart

China Inflation February 2014

Note: Year-on-year and annual average variation of consumer price index in %.
Source: National Bureau of Statistics of China (NBS).

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