China's consumer price index (CPI) rose by 1.3% year-on-year in February, marking the highest increase since January 2023 and surpassing economists' forecasts of a 0.8% rise.
Key Takeaways
China's consumer price index (CPI) rose by 1.3% year-on-year in February, the highest increase since January 2023. This surge was driven by increased spending during the Lunar New Year holiday, with flight ticket prices up 29.1% and gold jewelry prices soaring 76.6%. The core CPI, excluding food and fuel, rose by 1.8%, while producer price index (PPI) deflation eased to -0.9%. China has set a GDP growth target of 4.5-5% for 2026, the lowest since 1991.
- China's CPI rises 1.3% in February, highest since January 2023
- Lunar New Year holiday drives surge in consumer spending and prices
- Core CPI increases by 1.8%, matching levels last seen in March 2019
- PPI deflation eases to -0.9%, the slowest pace in over a year
- China sets GDP growth target of 4.5-5% for 2026, lowest since 1991
The surge was driven by increased spending during the Lunar New Year holiday, which saw flight ticket prices rise by 29.1% and gold jewelry prices soar by 76.6%, according to data from the National Bureau of Statistics (NBS). The core CPI, which excludes volatile food and energy prices, climbed by 1.8%, matching levels last seen in March 2019.
The Lunar New Year holiday, which ran from February 15 to February 23 — the longest on record — bolstered domestic travel and consumer spending, lifting the headline CPI as services prices surged. Service prices rose by 1.1%, contributing significantly to the overall increase in consumer prices.
Meanwhile, deflation in China's producer price index (PPI) eased to -0.9%, better than economists' expectations of a 1.2% fall and marking the slowest pace of deflation in more than a year. This moderation was attributed to stronger prices in advanced and emerging sectors as well as capacity management in key industrial sectors.
China has set a GDP growth target of 4.5-5% for 2026, the lowest since 1991, signaling a willingness to accommodate reforms that could help the economy reduce its reliance on external demand. The government's CPI target for 2026 remained unchanged at 'around 2%', a goal that China's state planner said was conducive to guiding public expectations and boosting market confidence.
Analysts remain uncertain about whether the recovery in consumer prices can last, with geopolitical tensions in the Middle East posing risks of further inflationary pressures. The ongoing conflict has already pushed up gold jewelry and gasoline prices in China by 6.2% and 3.1%, respectively.
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