China's inflation declines below zero for first time in 13 months

Figure skewed by seasonal distortion but also sign of persistent deflationary pressure

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China's consumer inflation dropped far more than expected to fall below zero for the first time in 13 months, an assessment skewed by seasonal distortions but also a sign of deflationary pressures persisting in the economy.

The consumer price index (CPI) declined 0.7 per cent in February from a year earlier, the National Bureau of Statistics said on March 9, compared with a 0.5 per cent gain in January.

That was lower than all but one forecast in a Bloomberg survey of analysts, whose median estimate was for a 0.4 per cent drop.

Even when adjusted for the effect of an earlier than usual Chinese New Year holiday, consumer inflation slowed to among the weakest levels in months, according to Goldman Sachs Group.

Symptoms of sluggish consumption included a decline in services prices, combined with a rare negative reading for core inflation.