China’s consumer inflation accelerated for the first time since August, caused by a burst of household spending around the Lunar New Year holiday even as deflationary pressures persist.
The consumer price index rose 0.5% in Jan from a year earlier, the National Bureau of Statistics said Sunday, compared with a 0.1% gain in the previous month.
A temporary spending boom during the eight-day break briefly masked the extent of the deflationary challenge facing the world’s second-biggest economy. The price of services increased 0.9%, accounting for more than 50% of the total rise in CPI, according to the statistics bureau.
China’s factory deflation extended into a 28th month with a 2.3% decline, flat with the index’s contraction in Dec. Analysts at Nomura Holdings estimate that China’s CPI could have been distorted by around 0.4 percentage point last month, as some prices gained when consumers ramped up purchases ahead of the festival that ran from January 28 to February 4 this year.
