China’s consumer inflation surged 1.3% in February from a year earlier, the largest increase in over three years, driven by holiday-related spending during the extended Lunar New Year.

Core inflation, excluding food and energy, rose 1.8%, the fastest pace since March 2019, supported by higher service prices for travel, dining, and entertainment.

Producer prices fell 0.9% year-on-year, marking the slowest deflation in more than a year as rising commodity costs helped stabilize factory-gate prices.

Policymakers kept the 2026 consumer inflation target at around 2% and lowered GDP growth projections to 4.5–5%, signaling cautious stimulus amid weak domestic consumption, CNBC has reported.

Geopolitical tensions from the Middle East conflict have further lifted prices for energy and precious metals, with analysts warning that prolonged disruption could push China’s economy toward stagflation.