China's Consumer and Producer Prices Fall Due to High Base Effect in February
The National Bureau of Statistics linked the price decline to the staggered timing of the Spring Festival, which led to a significant 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 from the National Bureau of Statistics (NBS) released on Sunday.
NBS statistician Dong Lijuan pointed to several factors behind the price decline, including the staggered timing of the Spring Festival and the subsequent high base effect, improved weather conditions in February, promotional pricing, and fluctuations in some international commodity prices.
The Spring Festival holiday spanning January and February this year created a higher comparison base due to last year's elevated food and service prices, while the 2024 holiday only took place in February. This year's lack of a similar surge negatively affected the year-on-year CPI comparison. However, Dong noted that when adjusting for the staggered timing of the festival, the CPI actually experienced a modest increase of 0.1 percent, suggesting that the trend of moderate price recovery remains intact.
Additionally, favorable weather conditions in February played a role in influencing the CPI. The milder weather this year aided in both the growth and transport of fresh vegetables, which helped stabilize food prices.
In the automotive sector, promotional discounts on fuel and new energy vehicles further impacted the CPI, with prices for these vehicles decreasing by 5.0 percent and 6.0 percent, respectively, leading to a 0.16 percentage point drop in the CPI.
On the industrial side, the PPI registered a 0.1 percent decline month-on-month and a 2.2 percent decrease year-on-year. This decline was attributed to the seasonal slowdown in production activities around the Spring Festival, reduced demand for building materials due to halted construction projects, and a stable coal supply that ensured sufficient reserves at power plants and ports. Furthermore, the effects of international oil price fluctuations contributed to price reductions in domestic petroleum-related industries.
The NBS economist highlighted that the gradual effects of macroeconomic policies and increasing production demand in certain sectors have also contributed to a narrowing of the PPI's decline.
Mathilde Moreau for TROIB News
NBS statistician Dong Lijuan pointed to several factors behind the price decline, including the staggered timing of the Spring Festival and the subsequent high base effect, improved weather conditions in February, promotional pricing, and fluctuations in some international commodity prices.
The Spring Festival holiday spanning January and February this year created a higher comparison base due to last year's elevated food and service prices, while the 2024 holiday only took place in February. This year's lack of a similar surge negatively affected the year-on-year CPI comparison. However, Dong noted that when adjusting for the staggered timing of the festival, the CPI actually experienced a modest increase of 0.1 percent, suggesting that the trend of moderate price recovery remains intact.
Additionally, favorable weather conditions in February played a role in influencing the CPI. The milder weather this year aided in both the growth and transport of fresh vegetables, which helped stabilize food prices.
In the automotive sector, promotional discounts on fuel and new energy vehicles further impacted the CPI, with prices for these vehicles decreasing by 5.0 percent and 6.0 percent, respectively, leading to a 0.16 percentage point drop in the CPI.
On the industrial side, the PPI registered a 0.1 percent decline month-on-month and a 2.2 percent decrease year-on-year. This decline was attributed to the seasonal slowdown in production activities around the Spring Festival, reduced demand for building materials due to halted construction projects, and a stable coal supply that ensured sufficient reserves at power plants and ports. Furthermore, the effects of international oil price fluctuations contributed to price reductions in domestic petroleum-related industries.
The NBS economist highlighted that the gradual effects of macroeconomic policies and increasing production demand in certain sectors have also contributed to a narrowing of the PPI's decline.
Mathilde Moreau for TROIB News
