(Yicai Global) March 9 -- China’s annual consumer price inflation rose by a faster-than-expected 0.9 percent last month, the same as in January, because a plunge in pork prices failed to offset higher energy costs and increased spending over the Chinese New Year holiday.

The consumer price index, published by the National Bureau of Statistics today, was still at its lowest since last September, but was higher than the average 0.77 percent forecast by 22 chief economists polled by Yicai Global. Inflation rose 0.6 percent from a month earlier, exceeding January’s 0.4 percent.

The impact of the lunar new year holiday snapped the downward trend in the CPI as spending on clothing, food, transport, and entertainment lifted prices, according to Li Chao, chief economist at Zheshang Securities. The cost of domestically refined oil also rose, he added.

As pork prices continue to fall, the CPI may fluctuate at a low level in the short term, said Liu Xuezhi, senior researcher at Bank of Communications’ financial research center.

Pork prices tumbled 42.5 percent last month from a year ago, outpacing January’s 41.6 percent decline.

As the pandemic abates, consumer demand will pick up and improve, which is expected to promote CPI stabilization and recovery, Liu said, adding that the rebound is likely to be within a relatively small range, with moderate overall price gains.

The producer price index rose 8.8 percent in February from a year earlier, the NBS data showed. The was roughly the same as the average forecast by the economists surveyed by Yicai Global. Factory gate prices were driven up by higher commodity prices, including crude oil and non-ferrous metals.

The PPI climbed 0.5 percent from January, compared with a drop of 0.2 percent in January.

The Ukraine crisis will tighten energy supply, further pushing up fuel prices, further stoking global inflation, according to analysts. That will also drag on the retreat in China’s PPI from high levels.

In terms of new price increase factors, global oil and non-ferrous metal costs have risen sharply this month amid the Russia-Ukraine conflict, forming strong support for the PPI’s year-on-year growth, said Zheng Houcheng, director of the Yingda Securities Research Institute.

Guotai Junan Research said imported inflation caused by overseas commodity price increases will not affect domestic prices too much, nor will it change the trends in the CPI and the PPI.

But in extreme cases, imported inflation could increase the probability of China’s CPI breaking past 3 percent in individual months as well as the risk of the PPI rebounding in the second quarter, it added.

Editor: Peter Thomas