China’s CPI falls in February adding to slowing | Australian Markets

Client costs fell in China in February for the primary time in 13 months, as persistent weak demand was compounded by the early timing of the Lunar New Yr vacation.

The Nationwide Bureau of Statistics reported on Sunday that the Client Value Index dropped 0.7 per cent in February in comparison with a yr in the past. On a month-to-month foundation, costs have been down 0.2 per cent from January.

Whereas many different nations wrestle with inflation, China’s policymakers face flat to falling costs, and the likelihood they may evolve into a deflationary spiral that will drag down the economic system.

The Chinese language authorities careworn the need to increase home demand and client spending in an annual report final week to its ceremonial legislature, the Nationwide Folks’s Congress, however held back on unveiling any dramatic new steps to spice up the economic system.

The Lunar New Yr, a time when spending rises for journey, eating out and leisure, got here in late January this yr as an alternative of February, because it’s based mostly on the cycles of the moon. Vacation spending helped drive the buyer price index up 0.5 per cent in January, but it surely then fell final month in comparison with 2024’s elevated degree.

Factoring out the impression of the vacation, the index rose 0.1 per cent final month, Dong Lijuan, a statistician on the authorities’s statistics bureau, mentioned in a written evaluation.

That’s nonetheless far decrease than splendid. Final week’s authorities annual report included an inflation goal of two per cent for this yr, however it’s more likely to fall far short of that purpose. The patron price index was flat in 2024, rising 0.2 per cent.

A burgeoning trade struggle with the USA might add to China’s financial headwinds.

Apart from the early Lunar New Yr, two different elements contributed to falling costs in February, Dong mentioned: Higher climate boosted farm manufacturing, driving down the price of contemporary greens and automakers additionally stepped up promotions to attempt to increase gross sales, decreasing costs for new automobiles.

The producer price index, which measures the wholesale price of items, fell 2.2 per cent in February, the statistics bureau mentioned.

Producer costs have been falling more sharply than client costs, placing strain on corporations to cut labour and different prices.