China is grappling with a decline in global demand — notably from the United States, which launched a trade war against Beijing last summer (NICOLAS ASFOURI)

Beijing (AFP) – The consumer price index in China fell to its lowest level in a year last month, while producer prices hardly budged, according to figures published Saturday by the National Bureau of Statistics.

The consumer price index (CPI) — a key measure of retail inflation — rose just 1.5 percent in February year-on-year, compared with 1.7 percent in January. It has now declined for four consecutive months and is at its lowest point since January 2018.

China is grappling with a decline in global demand — notably from the United States, which launched a trade war against Beijing last summer. 

Growth in China dropped to 6.6 percent last year, its lowest level in 28 years. The government this week announced it is aiming for growth of between just 6 and 6.5 percent this year.

The producer price index (PPI) — an important barometer of domestic demand — edged up by only 0.1 percent in February, in a further sign the Asian giant’s economy is slowing. 

That figure, matching January results, is the lowest for more than two years. The indicator has been in constant retreat for seven months. 

The increase in consumer prices is in line with analyst forecasts, but the rise in producer prices is weaker than expected. A Bloomberg news survey found an average forecast growth of 0.2 percent by economists.

“CPI inflation will most likely remain far below the 2019 government target of 3.0 percent,” said Nomura economist Ting Lu in a note.

Production prices could fall into negative territory this year, he added.

“Disinflation continues, and deflation in the manufacturing sector may be around the corner,” said Hong Kong economist David Qu, according to Bloomberg.

“The weak consumer and producer price data underline the need for continued government support for the economy,” he added.

Faced with a slowdown in activity, Premier Minister Li Keqiang announced a series of support measures on Tuesday including a reduction in company charges and VAT.

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