(MENAFN- AFP) China's consumer inflation jumped to 1.4 percent in February, rebounding from a more-than-five-year low, official data showed Tuesday, but concerns about deflation in the world's second-largest economy persist.
The increase in the consumer price index (CPI) compared with a gain of 0.8 percent in January, according to National Bureau of Statistics (NBS) figures.
The result, which exceeded the median forecast for a 1.0 percent gain in a survey of analysts by Bloomberg News, came largely due to higher prices for food and services surrounding China's annual Lunar New year holiday.
"Demand for fresh food increased" during the festival, senior NBS analyst Yu Qiumei said in a statement, "leading prices to rise by large margins."
Qiu added that transport and tourism prices also increased, while labour shortages prompted by migrant workers returning home also pushed up costs for services such as nannies and housekeepers, which rose 6.3 percent from the previous month.
Moderate inflation can be a boon to consumption as it encourages consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth.
Economists are increasingly worried that China is heading for a debilitating deflationary spiral, such as that which has plagued Japan for years, citing consistently weak CPI figures as well as accelerating falls in factory prices.
The NBS also said Tuesday that the producer price index (PPI) -- a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI -- declined for the 36th straight month in February.
The PPI fell 4.8 percent year-on-year, more than than the 4.3 percent decline recorded in January, and the worst result since October 2009.
"We continue to expect inflation to remain relatively low and still see disinflationary pressures in the economy," Nomura economists said in an analysis of the February data.
"To offset headwinds to economic growth, we expect monetary policy to be loosened further," they added.
The central People's Bank of China cut interest rates in February for the second time in three months, citing "historically low inflation", as the economy grows at its slowest annual pace in nearly a quarter of a century.
China's economy expanded 7.4 percent last year, its worst result since 1990, as authorities seek to transform the Asian giant's growth model to one in which consumer spending takes over as the key engine.
And last week leaders lowered their 2015 growth target to "approximately seven percent", while the objective for consumer inflation was set at "around three percent".
Consumer prices rose 2.0 percent last year.
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