The consumer price index for China it fell in February to its lowest level in a year and stood at 1% year-on-year, according to official data published on Thursday.
The figure is notably lower than the 2.1% registered in January and the lowest in the Asian giant since February 2022, according to the National Statistics Office. The statistician of this body, Dong Lijuan, attributed the fall “to the reduction in consumer demand after the holidays” of the Chinese New Year and “to the sufficient supply of the market.”
The annual pace of consumer inflation in China slowed in February to its lowest rate in a year, as consumers remained cautious despite the abandonment of strong COVID-19 controls at the end of 2022.
Combined with the persistence of producer price deflation, also reported on Thursday, The data shows that price pressure is no longer an obstacle to further government action to support the economic recovery from COVID-19, according to several analysts.
The reading was well below the median estimate of 1.9% in a Reuters poll and the 2.1% annual rise recorded in January. The Chinese government has set itself the target of an average level of consumer prices this year of around 3% higher than in 2022.
“For monetary policy, which is focused on consolidating the economic recovery and achieving a stable upward momentum, there is no limitation derived from an inflation rate that is within the political objectivesaid Bruce Pang, chief economist for Greater China at JLL.
Zhiwei Zhang, chairman of Pinpoint Asset Management, said the figures conflict with other data showing considerable strength in domestic demand.
“However, the weak CPI inflation leaves room for the Government to implement more monetary easing policies”he claimed.
However, economists do not expect big monetary policy moves this year. Last year, the Chinese government cut banks’ reserve requirements twice in order to stimulate the economy.
While other countries have suffered from high inflation rates for decades, China’s strenuous efforts to control COVID-19 last year disrupted production and suppressed demand, keeping price pressures contained. Economists expect inflation to strengthen in the coming months, largely thanks to the end of pandemic controls.