China's headline consumer price index rose 1.0 percent on the year in February, down sharply from 2.1 percent in January and well below the consensus forecast of 2.0 percent. The index fell 0.5 percent and advancing 0.8 percent previously. Core inflation also moderated, falling from 1.0 percent to 0.6 percent.

This decline in inflation in February largely reflects the impact of timing of lunar new year holidays, which fell in February last year but in January this year. This means that the level of the consumer price index was relatively high in February 2022, contributing to somewhat weaker year-over-year growth. PMI surveys also indicated that price pressures were subdued in both January and February.

Forecasters see a 2.0 percent year-over-year rate in February versus 2.1 percent in January. China's CPI has come in below Econoday's consensus the last four reports.

Consumer Price Index (CPI) is an index that measures changes over time in the price level of consumer goods and services purchased by residents, which reflects the overall changes in price level.

Consumer prices account for a majority of overall inflation, which is carefully monitored by investors worldwide. Investors worldwide monitor Chinese price changes closely. A pickup in inflation could mean an increase in interest rates is in the offing from the People's Bank of China while an easing could mean looser monetary policy. The monthly CPI is broken down by 8 categories with more detail available on the following day including aggregate information by urban and rural areas and provinces.

The CPI measures the change in the level of prices for a specified basket of goods and services normally purchased by urban and rural residents. Approximately 226 areas throughout the country are covered, including 80 counties and 146 cities. The current CPI is an annually chained Laspeyres price index and has been available since 2001. From 1978 to 2000, the index was compiled using current year weights for most items.