China's inflation eased more than expected on falling food prices in February, while producer price inflation accelerated at the fastest pace since 2008.
Inflation eased to 0.8 percent in February from a 32-month high of 2.5 percent in January, the National Bureau of Statistics said Thursday. Economists had forecast the rate to fall to 1.7 percent.
The government targets around 3 percent inflation for the whole year of 2017.
Food prices fell 4.3 percent, reversing a 2.7 percent rise in January. At the same time, non-food prices inflation slowed moderately to 2.2 percent from 2.5 percent.
Month-on-month, consumer prices fell 0.2 percent, the first fall in four months, and followed a 1 percent rise in January.
Another report from the statistical office showed that producer price inflation spiked to 7.8 percent, the fastest since 2008, from 6.9 percent in the previous month and exceeded the forecast for 7.7 percent.
The upshot is that given the limited feed-through to consumer prices, policymakers are not likely to be concerned about the high rate of producer price inflation, which in any case is set to peak within a month or two and then drop back as base effects reverse, Julian Evans-Pritchard, a China economist at Capital Economics, said.
Since consumer price inflation in the coming quarters is unlikely to breach the 3 percent upper bound of policymakers' comfort zone, the economist expects any further tightening of policy this year to be driven by concerns about credit risks rather than efforts to contain inflation.
by RTT Staff Writer
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