• Prior was +0.2% y/y
• CPI m/m +1.0% vs +0.5% expected
• Prior m/m CPI was +0.2%
• PPI y/y -0.9% vs -1.2% expected
• Prior y/y PPI was -1.4%

This is a hot reading and will be even hotter with the energy price rise in March. This is the highest reading in three years.

China’s Consumer Price Index, published monthly by the National Bureau of Statistics (NBS), is the primary gauge of consumer inflation in the world’s second-largest economy. The basket is weighted heavily toward food (roughly 32% of the total), making the headline figure sensitive to swings in pork, vegetable, and grain prices. The NBS also reports core CPI, which strips out food and energy, as well as producer prices (PPI) — together providing a fuller picture of domestic demand conditions.

China has struggled to shake deflationary pressure since the end of the pandemic. A prolonged property downturn, cautious consumer sentiment, and industrial overcapacity have all weighed on prices. For full-year 2025, annual CPI was essentially flat, missing the government’s roughly 2% target by a wide margin. Producer prices fared worse, declining for a third consecutive year as factory-gate deflation persisted across much of heavy industry.

The final months of 2025 offered tentative signs of improvement. November CPI rose 0.7% year-over-year — the highest since early 2024 — before accelerating to 0.8% in December, the strongest reading in nearly three years, helped by rising fresh vegetable prices and government trade-in subsidy programmes. Core inflation held at 1.2% in both months, a 20-month high.

January 2026 interrupted that trajectory. Headline CPI slowed sharply to 0.2% year-over-year, as the later timing of the Lunar New Year created an unfavourable base effect. Food prices fell 0.7%, pork dropped nearly 14%, and energy prices declined 5.0%. Core inflation eased to 0.8%. Analysts largely attributed the softness to seasonal distortions rather than a renewed deflationary impulse, expecting a rebound in February and we certainly got that.