- Nomura Holdings Inc.
China's consumer prices increased the most since mid-2014 in February as food costs rose amid the week-long Lunar New Year holidays. China's inflation accelerated to an annual 2.3% rate in February, according to the National Bureau of Statistics, compared with economists' forecast for a 1.8% increase. Food prices spiked 7.3%, up from the prior month's advance of 4.1%. Inflation is predicted to nudge higher this year, though economists believe that it is unlikely to reach levels that would undermine China's leaders' plans to boost government spending to cushion slowing economic growth. Last week the government announced this year's official inflation target of 3%. At the same time, producer prices, which have been declining for more than three years, plunged 4.9% in February from year earlier, a slight improvement compared with the preceding month's decrease of 5.3%.
Most economists expect Beijing to introduce further easing measures over the coming months as sluggish overseas and domestic demand put at risk the government's recently-announced 2016 GDP growth target band of 6.5%-7.0%. Last week the PBoC cut the reserve requirement ratio for large banks to boost higher lending levels.
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