China’s Inflation Rate Declined in February

China’s Consumer Price Index (CPI), a key measure of inflation, dropped by 0.7% year-on-year in February, exceeding analysts' expectations of a 0.5% decline. This decrease was driven by lower food and tobacco prices. Additionally, China’s Producer Price Index (PPI), which measures the cost of goods at the factory gate, fell by 2.2% year-on-year in February 2025.

In a related development, the Chinese government has maintained its economic growth target at around 5% for the third consecutive year, a goal that is ambitious yet anticipated. Beijing also lowered its annual inflation target to 2%, the lowest level in more than two decades, down from 3% or more in previous years. Furthermore, the GDP growth target for 2025 was set at 5%, with plans to boost domestic demand and support stable economic growth.

It is worth noting that China’s inflation rate recorded its highest pace in five months in January, with the CPI rising by 0.5% year-on-year. Meanwhile, producer prices continued to decline, reflecting a divergence in consumer spending and weakness in the manufacturing sector.