China’s National Bureau of Statistics (NBS) reported on Tuesday (March 9) that the consumer price index (CPI) for February slowed down due to concerns among consumers despite the Chinese government’s announcement of the end of its zero-tolerance policy towards Covid-19 in late 2022. The producer price index (PPI), which measures costs for goods at the factory gate, fell for the fifth straight month.
China’s February CPI rose by 1% year-on-year, a slowdown from the 2.1% growth in January, and less than the 1.9% gain analysts had expected. On a month-on-month basis, China’s February CPI fell by 0.5%, beating analysts’ expectations for a 0.2% increase after gaining 0.8% in January.
The Chinese government has set a 2023 CPI target of around 3% above 2022. However, in 2022, China’s CPI is only 2% higher than the government’s 3% target.
In February, the PPI fell 1.4% year-on-year, which was more than the 0.8% drop in January and more than the 1.3% decline expected by analysts.
The slower growth in CPI and the continuing decline in PPI indicates that demand in China remains sluggish, despite the government’s efforts to revive the economy by canceling its zero-tolerance policy towards Covid-19. The NBS did not provide any reason for the sluggish demand.
The slower growth in CPI and the decline in PPI could lead to further concerns about the strength of China’s economic recovery, especially as the country continues to grapple with the effects of the pandemic.