BEIJING (Reuters) – China’s annual consumer inflation slowed to its lowest level in a year in February. Consumers have remained cautious despite the end of powerful pandemic measures in the second half of 2022.
Combined with continued producer deflation, also reported on Thursday, the data suggests price pressures have not been an impediment to more government action to help the economy recover from the COVID-19 turmoil. , analysts said.
The consumer price index (CPI) in February was 1.0% higher than a year earlier, rising at its slowest pace since February 2022, the National Bureau of Statistics (NBS) said.
The result is well below the median estimate of 1.9% in a Reuters poll and the 2.1% annual increase seen in January.
The government aims to keep consumer prices on average about 3% higher this year than in 2022.
Bruce Pang, chief economist for Greater China at JLL, said: “Inflation stays within target bounds for monetary policy focused on solidifying the economic recovery and achieving steady upward momentum. no,’ he said. data.
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Zhiwei Zhang, president of Pinpoint Asset Management, said the figure contradicted other data showing considerable strength in domestic demand.
“However, the weakness in the consumer price index gives the government room for further monetary easing,” he said.
But economists generally don’t expect big monetary policy moves this year. The government cut bank reserve requirements twice last year to stimulate the economy.
While other countries have struggled with decades of high inflation, in China last year a vigorous effort to control COVID-19 disrupted production, curbed demand and put pressure on prices. was suppressed. Economists expect inflation to strengthen in the coming months, mainly due to the end of pandemic control.
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The yuan fell on Thursday as price data challenged by weaker external demand and weaker domestic property prices rekindled investor doubts about the pace of the recovery.
Congress has set a conservative 2023 GDP growth target of around 5%, analysts say. This shows that policy makers are aware of economic headwinds.
The NBS attributed the slowdown in consumer price growth to the drop in demand following the Lunar New Year holiday in January. Prices for most fresh produce have fallen as a result of the warm weather and abundant supplies, he said.
The seasonally adjusted CPI fell 0.5% month-on-month, below expectations of a 0.2% rise. The monthly CPI increase in January was 0.8%.
Core annual consumer inflation, which excludes volatile food and energy prices, stood at 0.6% in February compared with 1.0% in January.
Producer deflation deepened and extended into the fifth month.
The Producer Price Index (PPI) fell 1.4% year-on-year in February. A Reuters poll showed a median drop of 1.3%, compared with the annual contraction of 0.8% seen in January.
Since October, producer prices have been consistently lower than the previous year.
The economy posted one of its weakest performances in decades last year, weighed down by three years of pandemic containment, a downturn in real estate and a crackdown on private business.
To boost growth, the government plans to maintain its normal policy of spending on infrastructure.
Reported by Liangping Gao and Ryan Woo.Editing by Bradley Perrette
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