China's consumer inflation surges to three-year high in February. The consumer price index rose 1.3% year-over-year, significantly beating economist expectations of 0.8%. This marks the strongest rebound since January 2023, driven largely by extended Lunar New Year holiday spending on services including travel, dining, and entertainment. Core inflation climbed to 1.8%, matching levels last seen in March 2019. Meanwhile, producer price deflation is easing, with the PPI falling just 0.9% year-over-year, better than the anticipated 1.2% decline and the slowest deflation pace in over a year. Rising commodity and metal costs are stabilizing factory-gate prices. China maintains its 2026 consumer inflation target at around 2%, the lowest in over two decades, as policymakers aim to stimulate domestic demand amid ongoing industry price pressures.
