Consumer inflation in China unexpectedly accelerated to the fastest pace in more than four years in February, hitting a recently set official target as producer price growth weakened to the slowest pace in more than a year thanks to lower input prices.
China’s official consumer price index rose 2.9 per cent year on year last month, according to the National Bureau of Statistics. That was up from just 1.5 per cent in January and reflected a rapid alignment with the official target of “around 3 per cent” set by Premier Li Keqiang in his annual work report last week.
The statistics bureau attributed the jump in part to a base effect from the timing of the lunar new year holiday, which this year fell in February but occurred in January of 2017.
While the bureau attributed 1.1 percentage points of the move to a base effect from last year, the latest reading still came in well above a median forecast of 2.5 per cent from economists surveyed by Reuters.
Much of the rise came courtesy food prices, which rose 3.6 per cent year on year after a climb of just 0.2 per cent in January. That was despite a fall of 7.3 per cent in pork prices - which are heavily weighted in the CPI basket - as fresh vegetable prices climbed 17.7 per cent, adding almost half a percentage point to the headline growth figure.
Meanwhile the official producer price index slowed half a percentage point to notch a year-on-year rise of 3.7 per cent, the slowest pace since November 2016 as growth in the price of raw materials slowed 0.9 percentage points to 4.8 per cent year on year.
The stats bureau also attributed just 0.2 percentage points of the rise in factory gate prices to new growth, with the rest coming from a base effect. That left the latest reading just shy of a median forecast of 3.8 per cent.