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China Inflation February 2020

China: Inflation moderates in February as coronavirus hit demand

Consumer prices rose 0.8% over the previous month in February, below January’s 1.4% increase. The print mostly reflected a surge in food prices due to shortage of pork supply.

Inflation eased from January’s eight-year high of 5.4% to 5.2% in February. That said, the print was above the 5.1% that market analysts had expected. Annual average inflation rose from 3.2% in January to 3.5% in February.

Annual producer prices (PPI), meanwhile, fell 0.4% year-on-year in February. The print contrasted both the 0.1% rise in January and the 0.3% increase that market analysts had expected.

Yi David Wang, head of China economics at Credit Suisse, comments that price pressures are softening due to the outbreak of the coronavirus:

“On the non-food components, transportation vehicle fuel inflation dropped significantly from 7.2%yoy in January to -2.3%yoy in February, mainly due to the drop in oil price inflation together with the low traffic volume amid the COVID-19 outbreak. […] PPI deflation emerged again in February, falling to -0.4%yoy in February from 0.1%yoy in January as COVID-19 hit both domestic demand and supply chains.”

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