Consumer prices rose 2.5 % y-o-y in January, up from 2.1 % in December. Core inflation, which excludes food and energy prices, also picked up to over 2 %. The rise in prices of many items has been quite even, while prices in the travel industry rose nearly 10 % y-o-y in January. The true inflation picture was distorted somewhat by the fact that the Lunar New Year holidays occurred in January this year and February last year. The increase in producer prices picked up from 5.5 % y-o-y in December to 6.9 % in January. The increase in producer prices is largely driven by rising global commodity prices.
Even so, China's inflation rate remains modest, and is even expected to fall a bit February as the impact of the Chinese New Year holiday fades. Inflation is also below the target of "about 3 %" set by the People's Bank of China last year. The PBoC is expected to announce this year's inflation target at the National People's Congress next month.