Consumer Prices in China Rise Again
Nomura Institute (Japan): “Through 2024, China's economy will continue to suffer from weak domestic demand”
After six consecutive months of contraction, China’s consumer price index (CPI) rose 0.7% year-on-year for the first time in February 2024. According to data just released by National Bureau of Statistics of China (NBSC), consumer price growth last month was about 0.4%, which is slightly higher than economists had anticipated. Meanwhile, the overall inflation rate is up 1% from January 2024, when it had already recorded a 0.3% increase, and the “core” inflation rate, which does not account for either food or energy prices, is up 1.2% year-over-year.
According to analysts, surveyed by Hong Kong-based South China Morning Post newspaper, the rise in consumer prices was primarily related to the Lunar New Year, also known as the Spring Festival, China’s main national holiday, which was celebrated in February this year and fell on January in 2023.
At the same time, the producer price index fell 2.7% year-over-year and 0.2% month-over-month in February, following a 2.5% contraction in January. According to the NBSC press release, February 2024 “marked the 17th consecutive month of declining producer prices.”
In a recent report, analysts at the respected Japanese research center Nomura Institute wrote that China’s economy will continue to suffer from “still weak” domestic demand throughout 2024, with consumer price growth limited to 0.4% and producer price inflation contracting by 0.8 percent.