The national consumer price index (CPI) dropped by 0.7 percent in February, when compared with the same month a year prior. It was its first fall into negative territory since January 2024, Reuters and CNBC report.
The result followed January’s year-on-year gain of 0.5 percent, and was steeper than the annualised contraction of 0.5 percent forecast by Reuters economists.
Decreasing food, tobacco and alcohol prices led the 0.2 percent month-on-month fall, reflecting a post-Lunar New Year reduction in demand and Chinese households’ still-cautious spending habits despite government efforts to boost consumption.
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National Bureau of Statistics statistician Dong Lijuan has said that February 2024 provided a particularly high base level due to the timing of its Lunar New Year holiday, making last month’s decline seem extreme. “Excluding the impact of the different months of the Lunar New Year, CPI rose by 0.1 percent year-on-year in February,” he noted.
Last week, Beijing announced an annual consumer price inflation target of around 2 percent for 2025, along with an economic growth target of around 5 percent – the same as last year. The inflation target was down from 3 percent or higher in recent years, and the lowest it’s been in more than two decades.
“China’s economy still faces deflationary pressure,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, told media. “While sentiment was improved by the developments in the technology space, domestic demand remains weak.”
