China Inflation


Inflation picks up strongly in February

In February, consumer prices increased 3.2% over the same month last year. The print was well above the 2.0% rise observed in January and represents, in fact, the highest inflation rate since April 2012. In addition, the reading overshot market expectations that had prices rising 3.0%. That said, inflation figures for the first two months of the year are highly distorted by the Lunar New Year holiday, which fell in February this year compared to January in 2012. According to the statistical office, February inflation was boosted by soaring food prices, in particular by meat and fresh vegetables.

Building on the strong price increase, inflation halted the downward trend in place since February 2012, with annual average inflation remaining at January's 2.4%.

Meanwhile, the producer price index fell in February 1.6% over the same month last year, matching the result tallied in January. The print slightly exceeded the 1.5% fall expected by market analysts. As a result of the monthly drop, the annual average variation of the producer price index fell further from minus 1.9% in January to 2.1% in February.

The government expects that inflation will average 3.5% this year. FocusEconomics Consensus Forecast participants anticipate inflation to average 3.3% in 2013, which is unchanged from last month's estimate. In 2014, the panel sees inflation rising to 3.6%.

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China Inflation Chart

China Inflation February 2013

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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