China’s consumer price index (CPI) increased 1.4% year-on-year in February, up by 0.6 percentage points from the previous month, beating market consensus, according to data released by China’s National Bureau of Statistics.
Producer price index (PPI) was below market consensus, declining 4.8% year-on-year in February, compared with January’s 4.3% drop. The gauge has remained in negative territories for 36 consecutive months.
The inflation numbers are directly driven by increasing food prices. The average food CPI growth between January and February is 1.7%, versus average CPI growth of 1.1%.
The contribution of the Chinese New year, which also resulted in the growth in food prices, is larger than expected, according to a report by Goldman Sachs Global Macro Research.