China Sees Consumer Prices Rise in February, Breaking Six-Month Deflation Streak

Last Updated on March 9, 2024 1:03 pm

China, the world’s second-largest economy, experienced a positive turn of events as consumer prices rose in February for the first time since August, according to data from Beijing’s National Bureau of Statistics (NBS). The 0.7 percent increase, higher than the expected 0.3 percent, provided a rare bright spot amid challenges such as the lowest growth in decades, a prolonged property sector crisis, and escalating youth unemployment.

This positive development comes as senior officials gather in Beijing for the annual “Two Sessions” of China’s parliament and its top political consultative body, focusing on economic and national security issues. Premier Li Qiang expressed an ambitious goal of achieving five percent growth in 2024, acknowledging the difficulties ahead.

The country had entered deflation last July, with prices seeing a brief rebound in August. However, the latest rise in consumer prices, particularly in food and service sectors during the Chinese New Year period, indicates a shift. Analysts caution against prematurely concluding that deflation is over, emphasizing ongoing challenges like weak domestic demand and unstable property sales.

Despite the positive consumer price index, producer prices continued to fall in February, dropping by 2.7 percent. Beijing faces increasing calls for substantial measures to stimulate the economy, but the government has indicated reluctance to resort to significant bailouts, maintaining a fiscal deficit-to-GDP target of three percent, similar to the previous year.