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Inflation picked up in China last month, official figures showed Sunday, as the Lunar New Year holiday boosted January spending.<\/p>\n
China has struggled to raise consumption and stave off deflation for months as sluggish spending, a property slump and ballooning local government debt all weigh on growth.<\/p>\n
The consumer price index (CPI), a key measure of inflation, rose 0.5 percent last month, up from a 0.1 percent rise in November, according to the National Bureau of Statistics.<\/p>\n
The reading from January, which coincided with the start of the long Lunar New Year holiday this year, is the highest since August’s reading of 0.6 percent.<\/p>\n
Last month’s reading exceeded the 0.4 percent rise predicted by Bloomberg analysts.<\/p>\n
The NBS reported a rise in prices for goods associated with the holiday, where millions of people travel to their hometowns and celebrate with feasts and drinking.<\/p>\n
Fresh vegetable prices rose by 2.4 percent year-on-year and the price of pork rose by 13.8 percent.<\/p>\n
The boost in prices last month is “mainly due to higher food prices and tourism-related services prices on an earlier-than-usual Lunar New Year holiday,” Goldman Sachs analyst Xinquan Chen wrote in a note on Sunday.<\/p>\n
“But the boost is likely to become a drag in February as seasonal demand fades,” Chen said.<\/p>\n
China suffered its sharpest fall in prices for 14 years in January 2024, at the end of a four-month period of deflation.<\/p>\n
Inflation stayed below 0.5 percent for nine months of 2024.<\/p>\n
While deflation suggests the cost of goods is falling, it poses a threat to the broader economy as consumers tend to postpone purchases under such conditions, hoping for further reductions.<\/p>\n
A lack of demand can then force companies to cut production, freeze hiring or lay off workers, while potentially also having to discount existing stocks — dampening profitability even as costs remain the same.<\/p>\n
Beijing unveiled a slew of measures to boost the economy last year, including cutting interest rates and cancelling restrictions on homebuying.<\/p>\n
Last month, policymakers expanded a subsidy scheme for common household items, from water purifiers to laptops and electric vehicles.<\/p>\n
During the holiday period, sales of household appliances and communication equipment at “key monitored retail enterprises” were up more than 10 percent year-on-year, the Chinese commerce ministry said on Thursday.<\/p>\n
tjx\/fox<\/p>\n<\/p><\/div>\n