China's PPI is Sloping, Consumer Inflation Stable

China's PPI continues to slip as a result of government intervention in controlling price spikes. However, the sharp rise in crude oil prices is still a concern.

On Wednesday (09/March), China's National Bureau of Statistics released PPI data which rose 8.8 percent on an annual basis (Year-over-Year) in February. This figure is indeed still higher than the expected increase of 8.7 percent, but continues to be sloping compared to previous months.

Meanwhile, CPI (Consumer Inflation) data reported an increase of 0.9 percent on an annual basis. This figure was in line with economists' expectations and was unchanged from January's data. Meanwhile, CPI on a monthly basis (Month-over-Month) rose 0.6 percent, slightly higher than the 0.4 percent growth that occurred in the previous period.

"In February, China's CPI posted a bigger monthly increase due to the Lunar New Year holidays and fluctuations in energy prices in international markets," Dong Lijuan, NBS statistician, said in a note.

In further detail, food prices recorded a decline of 3.9 percent and are still the sector that has weighed on China's CPI growth in recent months. On the other hand, non-food prices actually rose 2.1 percent, continuing the upward trend from the previous month.

China's consumer inflation is expected to grow steadily following the CPI growth forecast set by Prime Minister Li Keqiang of 3.0 percent this year. However, most analysts are of the opinion that the sharp fluctuations in fuel prices on international markets caused by the war in Eastern Europe could affect producer prices.

It is known that the Russian invasion of Ukraine, which sparked Western sanctions against Moscow, has soared crude oil prices to a record high since 2008. It should be noted that high inflation spikes that are not accompanied by economic growth are feared to trigger stagflation which could have a negative impact on the economy.