Consumer inflation rises in February
Consumer inflation rose in China during February, hitting the highest level in over four years, thanks to rising food prices during the Lunar New Year holiday and low temperatures, the National Bureau of Statistics said on Friday.
Analysts said the wholeyear consumer inflation growth would be mild despite the surge in February, thus failing to pressure monetary policymakers to raise interest rates.
The Consumer Price Index increased by 2.9 percent in February from a year earlier, compared with 1.5 percent in January, the NBS said. It is the highest since November 2013, when the index rose by 3 percent year-on-year.
The high reading, which beats forecasts of most economists, has been caused by the low base effect and economic activity pick-up during the week-long Spring Festival holiday, which fell in February this year versus January last year, as well as low temperature in many parts of the country, which disrupted normal transportation of some agricultural products, said Sheng Guoqing, a senior statistician of the NBS, in a statement.
Travel activity increases during the Lunar New Year holiday pushed up prices of transportation and tourism, with prices of air and coach tickets as well as accommodation rising strongly, Sheng said.
A large number of rural laborers working in the cities choose to return to their rural home towns during the Lunar New Year holiday, leading to rising prices of labor, vehicle repair and maintenance and domestic services in the cities, Sheng said.
The seasonal factor suggests the strong rise in consumer inflation could be short-lived, analysts said.
“Extreme weather only affects short-term reading (of the CPI) and does not have an impact on the long-term trend,” said a research note from China Merchants Securities. “As the effect of the Spring Festival holiday fades out, the CPI is expected to fall in March,” it said.
This year’s consumer inflation would be mild on the whole and the highest monthly reading may not break the country’s inflation control target of at most 3 percent for this year, said the China Merchants Securities note. Inflation will not be a factor driving monetary policymakers to raise interest rates, it said.
China’s Producer Price Index, which measures factory-gate prices, rose by 3.7 percent year-on-year in February, down from 4.3 percent in January and slowing for the fourth consecutive month.