Bankinter | Price indicators continue to show the weakness of the Chinese economy. (i) CPI (February): down 0.7% year-on-year versus 0.4% expected versus up 0.5% previous. Core rate: down 0.1% year-on-year versus up 0.6% previous; (ii) Industrial Prices (February): down 2.2% year-on-year versus 2.1% expected versus 2.3% previous.
Bankinter analysis team’ view: More negative news for the Chinese economy. Inflation has fallen back into negative territory (for the first time since January 2024) and there are concerns that it is in deflation (a generalised fall in prices). Core inflation is down for the first time since 2021, and this is only the second time that this indicator has contracted in more than 15 years.
In February, food (down 3.3% year-on-year), household products (down 0.7%) and transport and communications (down 2.5%) continue to exert downward pressure. Industrial prices are following the same path, further increasing deflationary pressures in the Chinese economy. Among the main factors penalising prices, we highlight the weakness of domestic demand and the real estate sector. In a scenario of trade wars and with the tariffs already announced a week ago to the United States due to come into force yesterday, no changes are expected with regard to the weakness of the Chinese economy.
