China’s consumer inflation rebounded sharply in February, offering a fresh sign of improving domestic demand. Headline CPI rose from 0.2% yoy to 1.3%, well above expectations of 0.9% and marking the strongest increase in more than three years. On a monthly basis, prices climbed 1.0% mom, also beating economists’ forecasts for a 0.5% rise.
The surge in inflation was largely driven by seasonal factors. A nine-day Lunar New Year holiday boosted domestic travel and consumer spending, pushing service prices higher and lifting the overall CPI reading. Core CPI, which excludes volatile food and fuel prices, strengthened to 1.8% yoy from 0.8% in January, indicating broader price pressures beyond the holiday effect.
Upstream price pressures also showed signs of easing deflation. PPI improved from -1.4% year-on-year to -0.9%, the smallest decline since July 2024 and stronger than expectations of -1.1%. NBS statistician Dong Lijuan said the moderation in producer deflation reflected firmer prices in advanced and emerging industries, as well as capacity management in key industrial sectors.
