China's headline producer price index fell 2.7 percent on the year in February after a decline of 2.5 percent in January. Headline PPI inflation has now been in negative territory for more than a year. The index fell 0.2 percent on the month, as it did previously.
 
Consumer 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 PPI data were close to the consensus forecast for a year-over-year decline of 2.6 percent, but CPI inflation was above the consensus forecast. 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.

Producer prices have been in long annual contraction. February's consensus is minus 2.6 percent on the year versus January's contraction of 2.5 percent.

The Producer Price Index (PPI) measures the change in the price of goods purchased and sold by producers. The industrial producer price index reflects the trend and level of prices change when the products are sold for the first time. The industrial purchaser price index reflects the trend and level of prices change for the products purchased by the industrial enterprises as intermediate inputs.

It is a leading indicator of consumer inflation - when producers pay and charge more for goods the higher costs are usually passed on to the consumer.

The PPI measures the industrial products price changes for the domestic market. Unlike most other countries, China only produces a comparison with the same month in the previous year but not with the previous month. The PPI covers all manufacturing activities. The prices include excise taxes but exclude VAT. The industry breakdown for the PPI follows China's Industrial Classification of the National Economy. The data include a 38 industry breakdown and are not adjusted for seasonality. They are available by the 20th of the month following the reference month and are published in the daily NBS paper"China Information".

The statistical survey of industrial producer prices covers prices for over 11,000 products from 1702 subclasses, 191 groups; and the statistical surveys of industrial purchaser prices cover prices for over 6,000 industrial products from over 900 subclasses. Industrial producer prices are collected from combined surveys of key businesses and typical businesses. Starting from 2011, the key businesses are those with their turnover from primary activities over 20 million yuan, and the typical businesses are those with less than 20 million yuan. The surveys cover about 60,000 industrial enterprises in over 400 cities across the country.