Quick overview

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China’s consumer inflation rose to 1.3% in February, the highest level in three years, according to official data released Monday by the National Bureau of Statistics of China.

The figure marked a sharp increase from the 0.2% recorded in January, which had already slowed from 0.8% in December.

The reading also came in above the 0.9% forecast in a survey by Bloomberg. Meanwhile, the Chinese government announced a 2026 growth target of between 4.5% and 5%, the lowest objective since 1991—except for 2020, when no growth target was set due to the economic shock caused by COVID-19.

Lunar New Year spending pushed prices higher

The rise in consumer prices was largely driven by increased spending during the Chinese New Year celebrations in early February. This year, the holiday period was extended to a record nine days, encouraging higher consumption.

As a result, Chinese consumers spent more on domestic travel, dining out, and other goods, contributing to the uptick in inflation.

February’s data was also influenced by rising energy prices following the closure of the Strait of Hormuz, which disrupted oil supplies and intensified the global energy crisis. In that context, the military conflict in the Middle East shows no clear signs of easing in the near term.

Trump-Xi Summit

The initial enthusiasm surrounding the summit between the United States and China quickly faded after frustration in Beijing over what it saw as a last-minute effort by Washington to prepare an event that typically requires months of planning. In that context, the meeting between Donald Trump and Xi Jinping will aim to preserve stability in the relationship, though it does not guarantee the announcement of new trade agreements.

Ahead of the Republican president’s visit to China from March 31 to April 2, both countries are trying to overcome several obstacles and ease tensions. The United States has yet to assemble the delegation of chief executives that some officials had hoped for and has offered no clear signals about its tariff policy. Meanwhile, in Beijing there has been no progress on the investment protections Washington requested for U.S. companies, nor on resolving the dispute over restrictions on rare earth exports, a key point of friction between the two sides.