BEIJING: China’s economy is exhibiting renewed vigor, with recent indicators suggesting a robust start for this year, as the country’s consumer prices returned to positive territory for the first time in six months thanks to Spring Festival holiday spending.
Analysts said the latest data point to a gradual improvement in domestic demand, and they estimated that inflation will be kept within a reasonable range in the coming months, supported by steady economic recovery and robust policy measures.
Meanwhile, they cautioned that the broader economy will continue to grapple with pressures and uncertainties both domestically and internationally. They also said they expect the government to step up both fiscal and monetary policy support, including more fiscal spending to bolster domestic demand alongside further reserve requirement ratio reductions and policy rate cuts.
Data from the National Bureau of Statistics showed that the country’s consumer price index, a main gauge of inflation, rose 0.7 percent year-on-year in February after a 0.8 percent decline in January, well above market expectations.
The growth in core CPI, which excludes volatile food and energy prices and is deemed a better gauge of the supply-demand relationship in the economy, rose 1.2 percent year-on-year in February, after a 0.4 percent rise in January.
“The improvement in CPI indicates that the economy’s endogenous driving force is strengthening amid robust demand for commodities and services,” said Zhang Xuewu, head of the price analysis and forecasting division at the Price Monitoring Center, which is part of the National Development and Reform Commission.
China’s producer price index, which gauges factory-gate prices, dropped 2.7 percent year-on-year in February, following a 2.5 percent fall in January, the NBS said.
Zhang said the PPI dropped at a faster pace because February marks the offseason for industrial production due to Spring Festival, and the decline is also affected by still-weak external demand.
As domestic demand is set to turn for the better, with a series of policies promoting consumer spending and expanding effective investment taking effect, a moderate rise in overall price levels is anticipated in 2024, Zhang added. –The Daily Mail-China Daily news exchange item
