China Inflation February 2017


China: Inflation declines to over two-year low in February

March 9, 2017

In February, consumer prices in China fell 0.2% from the previous month, contrasting January’s 1.0% increase. The reading mainly reflected a sharp decline in prices for education, culture and recreation, transportation and communication, clothing and food, tobacco and liquors. That said, the monthly drop partially reflected seasonal distortions related to the Chinese New Year holidays, which fell in late January this year compared to February in 2016.

Inflation fell from January’s nearly two-year high of 2.5% to 0.8% in February. The print marked the lowest rate since January 2015 and was well below the 1.7% that market analysts had expected. Annual average inflation fell from January’s 2.1% to 1.9% in February.

Meanwhile, producer inflation rose from January’s 6.9% to 7.8% in February, which represented an over eight-year high. The print was above the 7.7% that the markets had expected and mostly reflected higher prices for commodities. The annual average variation of the producer price index swung from January’s minus 0.3% to plus 0.8% in February, which represented the highest reading since July 2012.

FocusEconomics Consensus Forecast participants expect that consumer inflation will average 2.2% in 2017, which is unchanged from last month’s estimate. In 2018, the panel sees consumer inflation inching up to 2.3%. Meanwhile, the panel expects producer inflation to be 2.3% in 2017, which is unchanged from last month’s projection. In 2018, panelists see producer inflation to be 1.8%.

Author: Ricard Torné, Lead Economist

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China Inflation Chart

China Inflation February 2017

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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