China Experiences Decline in CPI and PPI Due to High Base Effect in February
The National Bureau of Statistics attributed the price decline to the staggered timing of the Spring Festival and the resulting high base effect.
TroibNews 
China's consumer price index (CPI), a key indicator of inflation, decreased by 0.7 percent year-on-year in February, while the producer price index (PPI) fell by 2.2 percent according to data released by the National Bureau of Statistics (NBS) on Sunday.
NBS statistician Dong Lijuan attributed the price decline to several factors, including the staggered timing of the Spring Festival, which created a high comparison base, improved weather conditions in February, promotional price reductions, and fluctuations in some international commodity prices.
This year's Spring Festival, which occurred in January-February, resulted in a higher comparison base due to last year's increased food and service prices, as the 2024 holiday fell entirely in February. The lack of a similar surge in prices this year negatively impacted the year-on-year CPI comparison; however, when adjusted for the staggered timing of the holiday, the CPI actually showed a modest increase of 0.1 percent, suggesting that the trend of moderate price recovery persists, according to Dong.
Furthermore, favorable weather conditions in February played a role in the CPI changes. The milder weather of this year aided in the growth and transport of fresh vegetables, which helped stabilize food prices.
In the automotive sector, price-cut promotions for both fuel and new energy vehicles also affected the CPI. Prices for these vehicles dropped by 5.0 percent and 6.0 percent, respectively, leading to a reduction of 0.16 percentage points in the CPI.
On the industrial side, the PPI experienced a 0.1 percent month-on-month decline, as well as a year-on-year decrease of 2.2 percent. This decline was influenced by the seasonal slowdown in production activity around the Spring Festival, a drop in demand for building materials due to paused construction projects, and a stable coal supply, ensuring sufficient reserves at power plants and ports. Moreover, fluctuations in international oil prices contributed to lower prices in domestic petroleum-related industries.
The NBS economist pointed out that the gradual effects of macroeconomic policies and increasing production demand in certain sectors also aided in lessening the PPI decline.
Mark B Thomas for TROIB News
NBS statistician Dong Lijuan attributed the price decline to several factors, including the staggered timing of the Spring Festival, which created a high comparison base, improved weather conditions in February, promotional price reductions, and fluctuations in some international commodity prices.
This year's Spring Festival, which occurred in January-February, resulted in a higher comparison base due to last year's increased food and service prices, as the 2024 holiday fell entirely in February. The lack of a similar surge in prices this year negatively impacted the year-on-year CPI comparison; however, when adjusted for the staggered timing of the holiday, the CPI actually showed a modest increase of 0.1 percent, suggesting that the trend of moderate price recovery persists, according to Dong.
Furthermore, favorable weather conditions in February played a role in the CPI changes. The milder weather of this year aided in the growth and transport of fresh vegetables, which helped stabilize food prices.
In the automotive sector, price-cut promotions for both fuel and new energy vehicles also affected the CPI. Prices for these vehicles dropped by 5.0 percent and 6.0 percent, respectively, leading to a reduction of 0.16 percentage points in the CPI.
On the industrial side, the PPI experienced a 0.1 percent month-on-month decline, as well as a year-on-year decrease of 2.2 percent. This decline was influenced by the seasonal slowdown in production activity around the Spring Festival, a drop in demand for building materials due to paused construction projects, and a stable coal supply, ensuring sufficient reserves at power plants and ports. Moreover, fluctuations in international oil prices contributed to lower prices in domestic petroleum-related industries.
The NBS economist pointed out that the gradual effects of macroeconomic policies and increasing production demand in certain sectors also aided in lessening the PPI decline.
Mark B Thomas for TROIB News
