China’s consumer prices keep rising after holiday spending surge

China’s consumer prices rose during the first two months of the year as a longer-than-usual Chinese New Year holiday drove a surge in spending, though analysts cautioned that Beijing might need to implement stronger measures to boost demand to sustain the recovery.

The national consumer price index (CPI), a crucial gauge of inflation, rose by 0.8 per cent year on year during the January-February period, according to data released by the National Bureau of Statistics (NBS) on Monday.

Readings for the first two months are typically grouped together to reduce distortions from the Chinese New Year holiday, which fell in February this year but took place in January last year.

In February, consumer prices rose 1.3 per cent year on year – the largest monthly jump recorded in around three years – which the bureau largely attributed to the different timing of the extended break and a recovery in demand.

The monthly reading also beat market expectations for a 0.93 per cent increase, according to economists polled by financial data provider Wind, which did not provide a forecast for the January-February period.

But analysts expressed caution about the long-term outlook, with last month’s recovery partly driven by temporary factors such as Chinese New Year and rising tensions in the Middle East, which drove up oil prices.

South China Morning Post