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China's Feb CPI Rises 1.3% YoY, Hitting Near Three-Year High as Spring Festival Effect Boosts Domestic Demand

By AI Insights

2026-03-09

Trend analysis based on the updated indicator. View the Indicator→

China's latest Q1 (February) CPI YoY growth reached 1.3%, rebounding sharply from the previous reading of 0.2% and well above the market consensus of 0.8% to 0.9%. The single-month MoM growth rate reached 1.0%, marking the largest monthly increase in nearly two years, while the YoY rate hit a nearly three-year high since January 2023.

This recent uptick in inflation was driven jointly by the food and services sectors. Food prices reversed from a decline in the previous month to a YoY increase of 1.7%, with fresh vegetables surging 10.9%. In the non-food sector, services prices rose by 1.6% YoY, pushing the core CPI (excluding food and energy) up to 1.8%, reflecting broader upward price pressures.

The National Bureau of Statistics and market analysts pointed out that the significant rebound in the February CPI was primarily attributed to the "shifting-month effect" of the Lunar New Year holiday and the concentrated release of consumer demand. The long holiday drove a robust travel boom, leading to sharp increases in the prices of services such as airfares (up 29.1% YoY), vehicle rentals (up 19.8% YoY), and travel agency fees (up 12.5% YoY).

In the short term (1-2 months), as the Spring Festival holiday dividend fades, CPI growth may face seasonal downward pressure; it is necessary to closely observe whether revenge spending can translate into normalized daily consumer spending. In the medium term (3-6 months), although the CPI data sends a positive signal of a domestic demand recovery, the PPI during the same period remained in contraction territory with a 0.9% YoY decline, indicating a continued divergence between the production and consumer sectors. To achieve stable inflation and economic growth targets, authorities are expected to continue expanding domestic demand alongside an accommodative fiscal and monetary policy stance.

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