China's CPI Up 2.7% in February

China's consumer price index (CPI), a main gauge of inflation, rose 2.7 percent in February from a year earlier, the National Bureau of Statistics (NBS) said in a statement posted on its website on Thursday morning.

The figure, 1.2 percentage points higher than January's figure of 1.5 percent growth, represents the fourth consecutive month of positive growth for the indicator, following nine months of negative growth.

The figure also raises questions about whether the central government will be able to achieve its target of limiting CPI growth to 3 percent over 2010, announced by Premier Wen Jiabao during his delivery of the government work report to the National People's Congress last Friday.

A close look at the January figure shows that food prices in February rose 6.2 percent from a year earlier, while non-food prices were up 1 percent year-on-year.

The producer price index (PPI), another measure of inflation at the wholesale level, rose 5.4 percent from a year earlier, the NBS announced in the statement.

The figure quickened from 4.3 percent growth in January this year and 1.7 percent growth last December, the month in which the indicator finally emerged from 12 months of negative growth.

Chi Chenyu, a researcher at the Industrial and Commercial Bank of China's Investment Bank Research Center, said he was concerned that inflationary pressure would arrive in the middle of the year. He believed that the CPI would peak at that time.

Wang Tao, chief economist at UBS Securities, held the central bank would likely raise interest rates early in the second quarter in order to manage inflation expectations.

The statistics bureau also released statistics on investment and consumption.

Urban fixed-assets investment in the first two months of 2010 registered a year-on-year increase of 26.6 percent to reach 1.3 trillion yuan (190.4 US dollars). Of that figure, investment in real estate reached 314.4 billion yuan (46.05 billion US dollars), up 31.1 percent from a year earlier.

During the same period, the retail sales of consumer goods nationwide reached 2.5 trillion yuan (366.2 billion US dollars), up 17.9 percent from a year earlier.

The People's Bank of China, the country's central bank, also released February's lending figures on the same day.

Yuan-denominated new loans issued in February totalled 700.1 billion yuan, while yuan-denominated deposits increased by 958.9 billion yuan over the same period.

Links and Sources
National Bureau of Statistics: Statement (Chinese)
The People's Bank of China: Statement (Chinese)
Economic Observer: China's CPI Up 1.5% in January
Economic Observer: 2月CPI同比涨2.7% 高于预期 (Chinese)
Sohu: Graph (Chinese)