China Inflation

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China: Inflation rose in February

March 10, 2015

In February, consumer prices rose 1.2% over the previous month, which largely overshot the 0.3% increase in January. The monthly reading reflected higher prices for foodstuffs as well as for recreation, education and culture.

Annual inflation rose from January’s 0.8% to 1.4% in February, which overshot the 1.0% that market analysts had expected. January’s print had represented the lowest rate since November 2009. As a result of acceleration in inflation, the trend halted the downward trend in place since September 2014. Annual average inflation remained at the previous month’s 1.8% in February.

Meanwhile, the producer price index fell 4.8% in February over the same month last year (January: -4.3% year-on-year), which marked the lowest rate since October 2009. Moreover, the print exceeded the 4.3% decline that market analysts had expected. The annual average variation of the producer price index inched down from minus 2.1% in January to minus 2.3% in February.

While the rebound in inflation partially reflected a distortion from the Chinese New Year, which fell in February this year but was in January in 2014, analysts warn that disinflationary pressures are still intact and that it paves the way for further monetary policy easing in the weeks to come.

FocusEconomics Consensus Forecast participants expect that inflation will average 1.9% in 2015, which is down 0.1 percentage points from last month’s estimate. In 2016, the panel sees inflation edging up to 2.2%. Meanwhile, the panel expects producer prices to decline 2.0% in 2015. In 2016, panelists see producer prices remaining flat.


Author: Ricard Torné, Head of Economic Research

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China Inflation Chart


China Inflation February 2015

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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