China’s weak inflation eases pressure on global prices

BLOOMBERG

China’s consumer and producer prices remained subdued in February as food and commodities costs eased, suggesting the country’s reopening won’t be adding to global inflation pressures.
The consumer price index rose 1% last month from a year earlier, the National Bureau of Statistics (NBS) said, the lowest level since February 2022 and well below estimates. Less volatile core inflation eased to 0.6% from 1%, while producer prices stayed in deflation, dropping 1.4%.
“China is deflationary” given how much high unemployment and the ongoing property slump are weighing on costs, said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd. The country’s muted price pressures show the fear of the country’s reopening boosting global inflation “does not stand,” he added.
China’s economic rebound has progressed rapidly, with demand for services jumping and home sales showing some signs of stabilisation. Still, inflation has been muted as food costs fell after the Lunar New Year holiday and commodity prices like crude oil declined.
“Falling demand after the holiday and sufficient supply” led to the weak CPI figure, Dong Lijuan, NBS chief statistician, said in a statement accompanying the data. Dong added that the earlier Lunar New Year holiday — it fell in January this year, instead of February — meant the base of comparison was higher.  China’s benchmark CSI 300 Index traded 0.4% lower as of the mid-day break, as Asian stocks broadly rose.