Chinese inflationary pressures accelerated sharply in February on the back of huge spike in food prices.
According to the National Bureau of Statistics, consumer prices rose by 2.3% from 12 months earlier, easily beating expectations for an increase of 1.9%.
Not only was it well above the 1.8% annual pace reported in January, it was the sharpest annual increase since July 2014.
While the headline figure was hot, the composition of the increase suggests it may not be sustained in the months ahead.
For the month prices jumped 1.6%, the largest increase since February 2008, with food prices rising by an enormous 6.7%. Pork prices, a staple of the Chinese diet, jumped by 6.3% alone.
The monthly jump left the annual increase at 7.3%, with pork prices surging by 25.4%.
Excluding food, prices rose 0.3%, the fastest increase seen since February last year. However, from a year earlier, prices increased by just 1.0%, the slowest pace seen since October 2015.
On this evidence, not only did Chinese households eat well during the Lunar New Year holiday, the inflationary spike of February will likely be reversed in the period ahead.
While consumer price inflation took off, downstream price pressures remained all but non-existent.
From a year earlier producer price inflation fell 4.9%, in line with expectations. While they have now fallen in annual terms for 48 straight months, the figure marked the slowest pace of deflation since June 2015.
Though there are signs that disinflationary pressures are ebbing, the improvement registered in February appears to have been driven by one-off factors rather than a sustainable increase in inflationary pressures.
Often Chinese data surprises in the early parts of the year due to the timing of the Lunar New Year holiday. On face value, this result is merely a continuation of that theme.
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