China factory inflation eases as consumer prices jump on holiday

A man works inside an electronics factory in Qingdao, Shandong province, China, on Jan 29, 2018.
A man works inside an electronics factory in Qingdao, Shandong province, China, on Jan 29, 2018.PHOTO: REUTERS

BEIJING (BLOOMBERG) - China's factory inflation slowed for a fourth month while the consumer price index jumped as consumers traveled home to feast with family and friends for the Chinese New Year holiday.

The producer price index rose 3.7 per cent in February from a year earlier, compared to projected 3.8 per cent rise in a Bloomberg survey and 4.3 per cent in January. The consumer price index climbed 2.9 per cent, the statistics bureau said on Friday (March 9), versus a forecast of 2.5 per cent and almost twice as fast as January's 1.5 per cent.

Continued moderation in factory inflation from the world's largest exporter may signal the waning of a global reflation trend at a time when the US Federal Reserve is proceeding with monetary policy normalization. Domestic consumer prices are forecast to rise this year on resilient demand and recovering food prices, while remaining within the government's 3 per cent ceiling.

The moderation is in line with a Bloomberg Economics tracker, which uses daily movements of commodity prices to predict the monthly PPI reading.