China’s consumer inflation accelerated to the highest in more than three years due to the effects of the Lunar New Year holiday, while producer deflation persisted as weak demand remained a drag on an economy facing stiff external challenges.
Policymakers have been trying to boost consumption over the past two years, but analysts say more needs to be done to address the supply-demand imbalance.
The consumer price index (CPI) rose 1.3% year-on-year for the fifth month of gains and outpaced the 0.2% increase in January, data from the National Bureau of Statistics (NBS) showed on Monday. The rate was the highest in 37 months, and beat an expected 0.8% rise in a Reuters poll.
A nine-day Lunar New Year holiday boosted domestic travel and consumer spending, lifting the headline CPI as services prices surged.
Flight ticket prices rose 29.1% year-on-year, while gold jewellery prices soared 76.6%, according to NBS data.
Analysts said it was uncertain whether the recovery in consumer prices could last.
"Tensions in the Middle East will push inflation higher for as long as global energy prices remain elevated," said Zichun Huang, China economist at Capital Economics, referring to a rapid jump in oil prices in the wake of the U.S. and Israeli strikes against Iran.
However, China’s five-year plan unveiled at a key parliament meeting last week disappointed "in terms of boosting domestic demand," Huang said, meaning "any inflationary pickup will unwind once tensions ease."
Source : investing.com