2024.03.1112:43:00UTC+00China Inflation Turns Positive For First Time In 6 Months

China's inflation turned positive in February for the first time in six months but the upturn was driven by the timing of the Lunar New Year Holiday, diminishing hopes that the deflationary pressures are over. Consumer prices posted an annual increase of 0.7 percent in February after a 0.8 percent decrease in January, data from the National Bureau of Statistics showed over the weekend.

Inflation turned positive for the first time since last August. Beijing aims to bring inflation to 3 percent in 2024.

The main factor that helped overall prices to rise in February was the slowdown in food price deflation. Food prices dropped only 0.9 percent after a 5.9 percent decrease. Core inflation ticked up to 1.2 percent from 0.4 percent in the previous month.

Official data also showed that the producer price deflation deepened to 2.7 percent from 2.5 percent in January.

Capital Economics economist Zichun Huang said the persistent overcapacity is likely to keep price pressures subdued.

Huang noted that China's inflation is a symptom of its growth model built on a high rate of investment.

Inflation is likely to stay low in the long run as reducing dependence on investment is still far off, the economist added.