The war in Iraq has triggered inflation in China
According to the country’s statistics bureau, the consumer price index rose faster than all forecasts in February, reaching 1.3% year-on-year. The core consumer price index, which excludes volatile items such as food and energy, reached 1.8%, the highest level since 2019. The median estimate of economists surveyed by Bloomberg was 0.9 percent.
“March is likely to see further inflationary pressures thanks to a surge in oil prices. Unless the oil shock is much stronger and longer than expected, inflation is unlikely to prevent the People’s Bank of China from easing monetary policy this year,” said Lynn Song, ING Bank’s chief Greater China economist.
The war in Iran has sent oil prices soaring as many major producers in the Middle East cut output and the Strait of Hormuz, a bottleneck for a fifth of the world’s oil flows, remained virtually closed. China, the world’s largest oil importer, faces possible inflationary consequences, although it has built up crude oil reserves.
“The impact of global geopolitical conflicts on energy prices is starting to show,” Dong Lijuan, a statistician at the National Bureau of Statistics, said in a statement accompanying the data release. China’s domestic fuel prices rose 3.1 percent in February from the previous month, although down sharply from a year earlier, Dong said. current forecast of 0.4 percent.
