(Yicai) March 9 -- China’s consumer inflation accelerated to a more than three-year high last month, mainly as a result of this year’s record-long Lunar New Year holiday falling in mid-February and recovering consumer demand, while factory gate prices fell at a slower pace than in the prior month.

The consumer price index climbed 1.3 percent in February from a year earlier, up from a 0.2 percent increase in January and the highest since January 2023, according to data released by the National Bureau of Statistics today. The CPI expanded 1 percent on a monthly basis, the fastest in nearly two years.

The jump in the CPI mainly resulted from higher consumer demand during the extended Chinese New Year holiday period, which drove up service prices, said Dong Lijuan, an NBS statistician.

The Lunar New Year break, known as the Spring Festival in China, ran for nine straight days from Feb. 15 to 23 --  one day more than in previous years -- boosting domestic travel and consumer spending. The holiday also landed squarely in February this year, whereas it stretched across late January and early February last year.

Service prices jumped 1.6 percent last month from the same period of last year, compared with a 0.1 percent rise the month before, contributing about 0.75 percentage point to the overall uptick in the CPI, NBS figures showed.

Factory Gate Prices

The producer price index recorded its smallest decline last month since July 2024, falling 0.9 percent from a year ago and slowing from a 1.4 percent drop in January, as global commodity prices rose, demand in some domestic industries expanded, and economic policy support continued to take effect, according to the NBS.

With the “AI+” sector booming and the ongoing green transition, demand for China’s high-end equipment grew strongly, helping to steady and even lift prices in several industrial segments in last month, Dong pointed out.

Factory gate prices of electronic components and special electronic materials rose 4.9 percent from the same period of last year, with those of control micro-motors up 1.6 percent, service consumer robots 0.7 percent, biomass fuel 3.2 percent, special equipment for environmental protection 0.6 percent, aircraft 7.7 percent, ships and related equipment 0.5 percent, and three-dimensional printers 0.3 percent.

Efforts to curb excess production capacity have also supported price gains in some industries. For example, those of photovoltaic equipment and components rose 3.2 percent year on year, up from 0.5 percent in January, while lithium-ion battery prices inched up 0.2 percent, reversing a 1.1 percent decline and marking the first annual increase in 33 months.

Traditional industries such as coal mining and washing, cement manufacturing, auto production, and ferrous metal smelting and rolling also saw their year-on-year price declines narrow to varying degrees in February compared with January.

CPI Growth Target

The Government Work Report delivered by Premier Li Qiang at the ongoing National People’s Congress set an annual growth target of around 2 percent for the CPI. This target will guide market expectations while setting a realistic goal, Chen Changsheng, deputy director of the State Council Research Office, said at a media briefing on March 5.

Policy measures introduced last year, including steps to expand domestic demand, improve supply conditions, and ease cutthroat competition, have begun to show results, Chen noted, adding that the CPI was generally stable in 2025, while the decline in producer prices narrowed markedly.

Last year’s CPI turned out flat overall, missing the annual growth target of around 2 percent.

Policymakers will work to improve the overall supply-demand balance, pushing the overall price level from negative to positive territory and supporting a moderate recovery in consumer prices to foster a healthy economic cycle, according to this year’s Government Work Report. Promoting stable economic growth and a reasonable recovery in prices will be important considerations for monetary policy, the report noted.

Editors: Tang Shihua, Futura Costaglione