China’s consumer inflation rate rises for first time in six months. But the holiday boost is likely to fade

China’s consumer inflation turned positive for the first time in six months, largely supported by the Lunar New Year holiday, when a spending boom pushed up prices.

China’s consumer inflation turned positive for the first time in six months, largely supported by the Lunar New Year holiday, when a spending boom pushed up prices. The Consumer Price Index (CPI) increased by 0.7% in February from a year earlier, government data showed on Saturday, versus a rise of 0.3% forecast in a Reuters poll. This was the first increase in the inflation rate since August 2023. In January, the index fell by the fastest rate in 15 years. But analysts said the year-on-year gain was partly due to the Lunar New Year holiday, which fell in February this year and in January last year. Based on cycles of the moon, the date of the holiday changes each year. “I think it is too early to conclude that deflation in China is over,” said Zhiwei Zhang, president and chief economist for Pinpoint Asset Management. “Domestic demand is still quite weak.” China fought weak prices for most of last year due to a property slump, a stock market meltdown and subdued consumer sentiment. The People’s Bank of China (PBOC) has cut interest rates several times in the hope of boosting bank lending and bringing inflation back to its target of 3%. But the CPI only reached 0.2% in 2023, way below the official goal.