China's headline consumer price index rose 0.7 percent on the year in February after dropping 0.8 percent on the year in January. This volatility in the first two months of the year reflects the timing of lunar new year holidays, which occurred in January in 2023 but in February in 2024. Excluding this impact, headline inflation has now been close to zero or in negative territory for nearly a year. The index rose 1.0 percent on the month after advancing 0.3 percent previously.
 
Producer price inflation data also published today also showed subdued price pressures. Together with previously published PMI surveys, today's inflation data suggest that China's economy remains impacted by weakness in the property market despite recent measures aimed at improving liquidity conditions.
 
Today's data were stronger than the consensus forecast for a year-over-year increase of 0.3 percent in the CPI. The China RPI rose from minus 21 to minus 7 while the RPI-P rose from minus 30 to minus 13, indicating that recent Chinese data in sum are coming in slightly below consensus forecasts.

After 0.8 percent contraction in January that compared with expectations for 0.5 percent contraction, February's year-over-year rate is expected to move marginally into the plus column at 0.3 percent. China's CPI last peaked in January last year at 2.1 percent.

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.