China's consumer inflation accelerated to the highest in more than three years due to the effects of the Lunar New Year holiday.

The consumer price index, a main gauge of inflation, rose 1.3 percent year on year in February, according to data released by the National Bureau of Statistics on Monday, for the fifth straight month of gains, outpacing the 0.2 percent increase in January.

The core CPI, which excludes food and energy prices, increased 1.8 percent, compared with the 0.8 percent rise in January.

On a month-on-month basis, CPI went up one percent in February.

Monday's data also showed that the producer price index, which measures costs for goods at the factory gate, went down 0.9 percent, with the decline narrowing continuously.

A nine-day Lunar New Year holiday boosted domestic travel and consumer spending, lifting the headline CPI reading as prices for services surged.

The holiday period last year was one day shorter and started in late January.

Beijing has vowed to keep cracking down on excessive competition and ensure smoother exit of inefficient production capacity in order to stabilise prices.

However, the deflationary impulse across the economy continues to ⁠exert margin pressure on the manufacturing sector, while underpinning expectations of sustained price falls.

There was, however, a modicum of relief in the PPI's 0.9 percent fall, the smallest year-on-year drop since July 2024.

It declined 1.4 percent in January, with economists in a poll having expected a 1.2 percent drop.

NBS statistician Dong Lijuan attributed the milder producer deflation to factors such as stronger prices in advanced and emerging sectors as well as capacity management in key industrial sectors, according to a statement.

Beijing is aiming for ⁠GDP growth of between 4.5 percent and five percent for the year, slower than the previous year's "around five percent", signalling a willingness to accommodate reforms that could help the economy reduce its reliance on external demand.

In a report presented at the annual parliamentary meeting, Premier Li Qiang reiterated that driving "an appropriate rebound" in prices was one of the key considerations for monetary policy.

The government's CPI target for 2026 remained unchanged at "around two percent", a goal that China's state planner said was "conducive to guiding public ⁠expectations and boosting market confidence while also leaving room for macro regulation and further reforms". (Reuters/Xinhua)



Edited by Tony Sabine