China’s Feb. producer inflation flat amid lackluster demand; consumer inflation eases

BEIJING — China’s factory-gate inflation in February stayed flat from a month earlier, while gains in consumer prices slipped to the lowest level in more than a year as muted price pressures point to lackluster demand in the world’s second-largest economy.

The inflation data is the latest indication of slowing demand in China, as factory surveys also point to dwindling export orders amid a protracted US-Sino trade war.

Signs of deflation could prompt the government to roll out more aggressive measures to halt a sharper slowdown after growth dipped to nearly 30-year lows in 2018.

China’s producer price index (PPI) in February rose 0.1% on year, data from the National Bureau of Statistics (NBS) showed, the slowest pace since September 2016, and compared with a 0.1% increase in January.

Analysts polled by Reuters had expected producer inflation would pick up to 0.2%.

On a monthly basis, producer prices have already been falling over the past four months. In February, PPI fell 0.1%, moderating from a 0.6% decrease in January.

Data showed prices for raw materials dropped 1.5% on year.

Continuously falling producer prices will further eat into profits at many Chinese industrial firms as earnings have been falling in the past few months, putting pressure on investment, consumption and employment.

Data this week showed China’s exports in February tumbled the most in three years and imports fell for a third straight month, heightening fears about a global slowdown.

The government is targeting economic growth of 6.0% to 6.5%t in 2019, Premier Li Keqiang said at Tuesday’s opening of the annual meeting of China’s parliament, a lower target than set for 2018.

The consumer price index (CPI) in February rose 1.5% from a year earlier, the slowest since January 2018, and slower than the 1.7% increase in January and below the government target of around 3% this year.

Analysts had expected it to have eased to 1.5%.

On a month-on-month basis, the CPI rose 1%.

The food price index in February rose 0.7% from a year earlier, compared with January’s reading of 1.9%.

The core consumer price index, which strips out volatile food and energy prices, climbed 1.8% on year, easing from January’s 1.9% gain. —