(Yicai) March 10 -- China’s consumer prices declined in February for the first time in 13 months, mainly as demand softened after the Chinese New Year holiday the month before, while the downturn in factory gate prices slowed further.

The consumer price index dropped 0.7 percent last month from a year earlier, compared with a 0.5 percent increase the previous month, the National Bureau of Statistics said yesterday. On a monthly basis, the CPI fell 0.2 percent.

The drop mainly resulted from a high comparable base a year ago, NBS statistician Dong Lijuan said. Food and service prices were much higher in February last year than they were last month because Chinese New Year fell in January this year, while it was in February last year.

Excluding the seasonal impact of Chinese New Year, the CPI would have risen 0.1 percent last month from a year earlier, according to NBS estimates.

Food prices in China plunged 3.3 percent in February from the same period of 2024, dragging the CPI down by about 0.6 percentage point and becoming the main factor contributing to decline in prices. Air fares and other tourism prices tumbled by nearly 23 percent and 9.6 percent, respectively.

Favorable weather conditions for growing and transporting vegetable as well as lower vehicle prices and promotions also contributed to the drop, Dong added. In February, vegetable prices sank 12.6 percent from a year ago, while prices of fossil fuel-powered and new energy vehicles dropped 5 percent and 6 percent, respectively.

The CPI is expected to rise 0.1 percent this month from the same period of 2024, mainly because of a low base effect, Wang Qing, chief macroeconomic analyst at Golden Credit Rating, told Yicai. Price weakness early in the year leaves ample room for policies to boost consumption and timely interest rate cuts by the central bank, he added.

Premier Li Qiang said last week that the government has set a consumer inflation target of around 2 percent for this year, down from last year’s goal of about 3 percent.

Factory-Gate Prices

Producer prices declined for the 29th consecutive month in February, but at the slowest pace since last August. The producer price index fell 2.2 percent from a year earlier, slowing from a 2.3 percent decline in January, according to the NBS. On a monthly basis, it dipped 0.1 percent.

Prices in the ferrous metal smelting and pressing industry sank 10.6 percent last month from a year ago because of weaker demand for construction materials during Chinese New Year, Dong said. Moreover, ample coal supply during the holiday led to a 25 percent drop in coal processing prices.

Oil drilling, organic chemical raw material manufacturing, and refined petroleum product prices fell 5.1 percent, 4.5 percent, and 1.6 percent, respectively, in the period, mainly as fluctuations in international oil prices dragged down domestic petroleum-related industries.

Meanwhile, the gradual effects of the government’s economic policies and increased demand in some industries helped to limit the decline in the PPI.

Slowing exports due to trade frictions may continue to weight on industrial product prices, Wang noted. The PPI could fall by around 2 percent this month from a year earlier, he added.

Editor: Futura Costaglione