Financial News: China Inflation Strongest Since Early 2023

China Inflation Strongest Since Early 2023

(RTTNews) - China's consumer prices increased the most in more than three years in February, driven by higher spending during the Lunar New Year holiday, while producer prices continued to fall, official data revealed Monday.

Consumer prices gained 1.3 percent year-on-year in February, faster than the 0.2 percent rise in the previous month, the National Bureau of Statistics said. This was the strongest increase since January 2023. Prices were expected to climb 0.9 percent.

On a monthly basis, consumer prices rose 1.0 percent in February, up sharply from 0.2 percent in January.

Core inflation that excludes volatile food and energy prices rose to 1.8 percent from 0.8 percent in January.

Due to holiday spending, food prices climbed 1.7 percent in February, reversing a 0.7 percent fall in January. At the same time, non-food prices increased 1.3 percent.

The bureau also said that producer prices contracted 0.9 percent on a yearly basis, following the 1.4 percent fall a month earlier. Economists had forecast an annual fall of 1.1 percent.

ING economist Lynn Song said there is further inflationary pressure likely ahead in March thanks to the surge in oil prices. "Inflation for 2026 as a whole could also be supported by 'anti-involution' efforts," added Song. The economist noted that unless the oil price shock is notably stronger and longer than expected, inflation is unlikely to inhibit People's Bank of China easing this year.

Song continues to see room for a rate cut in the second quarter as the economy likely got off to a soft start in 2026, though odds are rising for policymakers to choose a more cautious route and push this back.

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