China's inflation moderates in Feb

EASED INFLATION

In breakdown, inflation rose 2.1 percent in cities and 1.7 percent in rural areas from the same period of last year, the NBS data showed.

Food prices rose 2.7 percent year on year and contributed to the 0.9-percentage-point increase in February's CPI growth.

Prices of fruit, aquatic products, vegetables and grain went up year on year in February, with fruit price seeing the largest increase of 19.7 percent.

Bucking the trend, prices of poultry and meat dropped from the same period of last year with the price of pork, China's staple meat, down 8.7 percent.

Prices of non-food products climbed 1.6 percent from a year ago, propped up by prices of household services and processing and maintenance services, Chinese medicine, communication tools, tours and outings, and rent.

On a month-to-month basis, CPI edged up 0.5 percent last month from January, while food prices rose 1.7 percent, down from 3.7 percent in January, and prices of non-food remained flat.

Lu Ting, economist with Bank of America Merrill Lynch, said the major factor driving the sharp decline in food inflation was the distortion of the Chinese Lunar New Year holiday, which fell at the end of January and ended in early February, along with the government frugality campaign and abundant pork supply.

He thought 2.3 percent was a more appropriate reading for the average CPI in the Jan.-Feb. period.

China's inflation has slowed it pace for four straight months, as the country's economic growth decelerated amid industrial restructuring and furthering reform.

Tang Jianwei, researcher from the Bank of Communications, said the mild CPI figure was also affected by the slowing economic growth in the last quarter of 2013 and tightened liquidity.

In the fourth quarter of 2013, China's economy grew by 7.7 percent year on year, the NBS data showed.

On Sunday, the bureau also revealed that the producer price index (PPI), which measures inflation at the wholesale level, contracted 2 percent year on year in February after a 1.6-percent decline in January.