On March 9, the National Bureau of Statistics released February’s national price data, showing that due to concentrated consumption during the Spring Festival, the Consumer Price Index (CPI) rose by 1.0% month-on-month and 1.3% year-on-year, marking the highest increases in nearly two and three years respectively. Core CPI, excluding food and energy prices, increased by 1.8% year-on-year. A significant rebound in service prices was the primary driver of the CPI rise. Influenced by rising international commodity prices, rapid demand growth in certain domestic sectors, and the continued effects of macroeconomic policies, the Producer Price Index (PPI) rose month-on-month for the fifth consecutive month, while its year-on-year decline narrowed for the third month in a row. Overall, prices showed signs of recovery. Analysts suggest that the upward trend in CPI is expected to continue, and the improvement in PPI reflects steadily strengthening momentum in domestic economic recovery. The month-on-month CPI increase exceeded seasonal levels. Data revealed that the month-on-month CPI growth expanded from 0.2% in the previous month to 1.0%, while the year-on-year increase rose from 0.2% to 1.3%. Core CPI, excluding food and energy, increased by 1.8% year-on-year. Dong Lijuan, Chief Statistician of the Urban Department at the National Bureau of Statistics, noted that the month-on-month increase was mainly driven by extended Spring Festival holidays and concentrated consumer demand, leading to higher-than-seasonal service price increases. Among services, airfares, vehicle rentals, travel agency fees, and hotel accommodation prices rose by 31.1%, 24.7%, 15.8%, and 7.3% respectively, collectively contributing about 0.32 percentage points to the month-on-month CPI increase, accounting for over 30% of the total rise. Pet services and vehicle maintenance prices also saw double-digit month-on-month growth, increasing by 12.0%, 11.6%, and 3.1% respectively. Movie and performance ticket prices rose by 9.9%, while dining-out prices increased by 1.1%. Year-on-year, the national CPI growth expanded from 0.2% in the previous month to 1.3%, the highest in nearly three years, with service prices again being the main contributor. In February, service prices rose by 1.6%, up 1.5 percentage points from the previous month, contributing approximately 0.75 percentage points to the year-on-year CPI increase. Within services, airfares, vehicle rentals, travel agency fees, and hotel accommodation prices shifted from declines to increases. Zhao Gege, Chief Macro Analyst at Everbright Securities, stated that due to extended Spring Festival holidays and concentrated consumer demand, service price increases exceeded seasonal levels. Multiple factors support a fluctuating recovery in CPI growth. Data from the National Bureau of Statistics showed that from January to February, the average CPI increased by 0.8% year-on-year, matching the growth rate in December of the previous year. Feng Lin, Executive Director of Research and Development at Oriental Jincheng, noted that due to the timing of the Spring Festival causing significant fluctuations in year-on-year CPI growth at the beginning of the year, it is advisable to observe January and February data together. The average year-on-year CPI growth for January-February being consistent with December’s figure indicates that the early-year consumer price trend continues the recovery momentum seen since the second half of 2025, driven by increased efforts to boost consumption and counter "internal competition," as well as accelerating international gold prices. Feng Lin also pointed out that prices remain at low levels, fundamentally due to consumption still needing further stimulation. After the Spring Festival, service consumption prices typically decline seasonally, which will pressure March’s CPI performance. It is expected that March’s year-on-year CPI will be around 0.9%. In the near term, year-on-year CPI is likely to remain relatively low, providing room for moderate strengthening of pro-growth policies. Zhao Gege believes the upward trend in CPI is expected to continue, citing key measures announced during the National People’s Congress, such as plans to increase urban and rural incomes, create new consumption scenarios, and implement staggered paid leave systems, which are expected to boost service prices. Recent efforts to regulate hog production capacity may accelerate the reduction in supply, leading to higher pork prices in the second half of the year. Additionally, the U.S.-Iran conflict has significantly impacted oil prices, creating temporary imported inflationary pressures. PPI is expected to turn positive year-on-year in March. In February, PPI continued to improve, with a month-on-month increase of 0.4%, matching the previous month’s growth and marking the fifth consecutive monthly rise. Year-on-year, PPI fell by 0.9%, with the decline narrowing by 0.5 percentage points, the third consecutive month of narrowing declines. Feng Lin attributed the strong month-on-month PPI growth to two main factors. First, the overall rise in international oil prices since the beginning of the year had a more pronounced impact on domestic PPI in February. Additionally, rising international non-ferrous metal prices drove up prices in related domestic industries. Furthermore, international input factors are gradually increasing costs and prices in mid- and downstream industries. Second, driven by the global artificial intelligence investment boom, prices in the semiconductor industry chain have risen sharply, with the month-on-month increase in computer, communication, and other electronic equipment manufacturing prices accelerating in February. Among these, prices for electronic semiconductor materials, storage devices and components, and integrated circuit packaging and testing rose by 2.8%, 1.2%, and 1.1% respectively. Dong Lijuan highlighted that year-on-year, the integrated effects of domestic macroeconomic policies are becoming evident, with positive changes in prices for some industries. First, the accelerated construction of a modern industrial system has led to price increases in related sectors. With the vigorous development of "AI+," prices for electronic components and specialized materials manufacturing rose by 4.9%, while control micro-motor prices increased by 1.6%. Green transformation efforts pushed up biomass fuel processing prices by 3.2%. Strong growth in high-end equipment drove aircraft manufacturing prices up by 7.7%. Second, capacity management in key industries and comprehensive measures to address "internal competition" have shown results, with prices for photovoltaic equipment and components manufacturing rising by 3.2%, up 2.7 percentage points from the previous month. Lithium-ion battery manufacturing prices shifted from a 1.1% decline in the previous month to a 0.2% increase, marking the first rise after 33 consecutive months of year-on-year declines. Zhao Gege stated that recent disruptions in Hormuz Strait transportation due to U.S.-Iran tensions, along with production cuts by oil-producing countries, have pushed international oil prices above $100 per barrel, significantly increasing domestic imported inflationary pressures. It is expected that PPI will turn positive year-on-year in March.