BEIJING, CHINA – NOVEMBER 6: Women wearing Qing Dynasty costumes pose for a photo inside the Forbidden City in Beijing, China on November 6, 2025.
Chen Xin | Getty Images News
China’s consumer inflation rate rose by the most in more than three years, as long holidays boosted spending and deflation in factory prices eased.
China’s National Bureau of Statistics reported on Monday that the consumer price index rose 1.3% in February from a year earlier, beating the 0.8% rise expected by economists polled by Reuters. The increase followed a 0.2% increase in January and marked the strongest recovery since January 2023, according to LSEG data.
The index rose 1% from the previous month, beating economists’ expectations for a 0.5% rise.
Official data showed China’s producer price index fell 0.9% from a year earlier, beating economists’ expectations for a 1.2% decline and slowing from a 1.4% decline in January.
At a top economic policy meeting held last week, the Chinese government kept its annual consumer inflation target for 2026 at “approximately 2%.” The target, originally set for 2025, is the lowest level in more than two decades as Chinese policymakers sought to shore up domestic demand and curb fierce price competition that is spreading across many industries.
Inflation targeting acts as a ceiling rather than a target to be achieved. Although consumer prices were flat overall in 2025, core inflation, which excludes food and energy prices, rose by 0.7% as consumer confidence remained weak.
Beijing also lowered its GDP growth target for this year to a range of 4.5% to 5%, the lowest ambitious target in history dating back to the early 1990s, as officials acknowledged persistent deflationary pressures and rising geopolitical uncertainty.
To shore up domestic spending, Chinese authorities earmarked 250 billion yuan ($36.2 billion) in this year’s fiscal budget to subsidize consumer trade-in programs (down from 300 billion yuan in 2025), as well as 100 billion yuan in government funds to support private investment and consumer spending.
“The pace of[stimulus]will remain gradual,” said Larry Hu, chief China economist at Macquarie. Policymakers see weak consumption as a structural problem to address, but exports and manufacturing are expected to continue to drive growth, making “the need for aggressive consumer stimulus is low.”
“The main variable is exports,” Hu said in a memo last Thursday. “If exports remain strong, policymakers may continue to tolerate weak domestic consumption. Conversely, weak exports may prompt them to ramp up domestic stimulus to meet gross domestic product (GDP) targets.”
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