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China's Feb producer inflation flat amid lacklustre demand, consumer inflation eases
[BEIJING] China's factory-gate inflation in February stayed flat from a month earlier, while gains in consumer prices slipped to the lowest level in more than a year as muted price pressures point to lacklustre demand in the world's second-largest economy.
The inflation data is the latest indication of slowing demand in China, as factory surveys also point to dwindling export orders amid a protracted US-Sino trade war.
Signs of deflation could prompt the government to roll out more aggressive measures to halt a sharper slowdown after growth dipped to nearly 30-year lows in 2018.
China's producer price index (PPI) in February rose 0.1 per cent on year, data from the National Bureau of Statistics (NBS) showed, the slowest pace since September 2016, and compared with a 0.1 per cent increase in January.
Analysts polled by Reuters had expected producer inflation would pick up to 0.2 per cent.
On a monthly basis, producer prices have already been falling over the past four months. In February, PPI fell 0.1 per cent, moderating from a 0.6 per cent decrease in January.
Data showed prices for raw materials dropped 1.5 per cent on year.
Continuously falling producer prices will further eat into profits at many Chinese industrial firms as earnings have been falling in the past few months, putting pressure on investment, consumption and employment.
Data this week showed China's exports in February tumbled the most in three years and imports fell for a third straight month, heightening fears about a global slowdown.
The government is targeting economic growth of 6.0 to 6.5 per cent in 2019, Premier Li Keqiang said at Tuesday's opening of the annual meeting of China's parliament, a lower target than set for 2018.
The consumer price index (CPI) in February rose 1.5 per cent from a year earlier, the slowest since January 2018, and slower than the 1.7 per cent increase in January and below the government target of around three per cent this year.
Analysts had expected it to have eased to 1.5 per cent.
On a month-on-month basis, the CPI rose one per cent.
The food price index in February rose 0.7 per cent from a year earlier, compared with January's reading of 1.9 per cent.
The core consumer price index, which strips out volatile food and energy prices, climbed 1.8 per cent on year, easing from January's 1.9 per cent gain.