China’s consumer inflation accelerated for the first time since August, fuelled by a surge in household spending during the Lunar New Year holiday despite persistent deflationary pressures, Chinese media reported.
The consumer price index rose 0.5 per cent in January from a year earlier, the National Bureau of Statistics said on Sunday, after rising 0.1 per cent in the previous month. Economists’ average forecast was for a 0.4 per cent rise.
A temporary spending boom during an eight-day hiatus briefly masked the scale of the deflationary problem facing the world’s second-largest economy. The cost of services rose 0.9 per cent, accounting for more than 50 per cent of total CPI growth, according to the statistics bureau. China’s industrial deflation is now in its 28th month, with prices down 2.3 per cent, remaining in line with the index’s contraction in December.
Analysts at Nomura Holdings Inc. including Sonal Varma and Si Ying Toh estimated that China’s CPI could have been impacted by 0.4 percentage point due to Lunar New Year celebrations.
The state of the consumer economy is increasingly at the centre of China’s attention after it exchanged the first blows in a trade war with the US. Improved domestic demand is needed to help offset the impact of higher export duties imposed this month by the Trump administration.
