SHANGHAI: China’s consumer inflation accelerated for the first time since August, in what’s likely a blip caused by a burst of household spending around the Lunar New Year holiday even as deflationary pressures persist.
The consumer price index (CPI) rose 0.5% in January from a year earlier, the National Bureau of Statistics said yesterday, compared with a 0.1% gain in the previous month.
The median forecast of economists surveyed by Bloomberg was a 0.4% increase.
A temporary spending boom during the eight-day break is briefly obscuring the extent of the deflationary challenge facing the world’s second-biggest economy.
China’s factory deflation extended into a 28th month with a 2.3% drop, flat with the index’s contraction in December.
Analysts at Nomura Holdings Inc including Sonal Varma and Si Ying Toh estimate that China’s CPI could have been distorted by around 0.4 percentage point last month, as some prices gained when consumers ramped up purchases ahead of the annual festival that ran from Jan 28 to Feb 4 this year.
The Lunar New Year is a moving holiday that fell entirely in February in 2024.
The health of the consumer economy is increasingly in focus for China after it exchanged the first blows in a trade war with the United States.
An improvement in domestic demand is urgently needed to help offset the effects of higher tariffs on exports imposed this month by the Trump administration. — Bloomberg
