China's consumer price inflation at 1 ½ year high on food price rise, PPI deflation eases

However, experts call it temporary and unlikely to call for any policy response.

Consumer price inflation has in a big way surprised on the higher side in China in the second month of the year, but experts call it temporary and unlikely to call for any policy response.

The CPI index increased 2.3% in February from a year earlier compared to 1.8% in January and analysts' estimate of 1.9%. The February number is its highest since mid-2014.

The month on month rate increased to 1.6% from 0.5% way above the market expectations of 1.1%.

The producer price index which has been on the negative territory of late, showed that factory gate deflation has eased to 4.9% year-on-year from 5.3%, the National Bureau of Statistics said.

Higher food prices, especially vegetables, contributed to the surge in consumer inflation while mining and raw materials prices continued to be the biggest drag on factory prices, details showed.

The market is now waiting for retail sales, industrial output and urban investment numbers for January due on 12 March. In December, retail sales in the world's second largest economy had grown 11.1% and analysts expect the rate to have eased a bit to 10.8% in January.

Industrial production growth may have slowed to 5.6% in January from 5.9% growth recorded in the previous month while urban investment growth could have dropped to 9.5% from 10%, according to consensus forecasts.

"Food prices surged before the Spring Festival and a cold wave pushed them higher," Bloomberg quoted Nomura's China economist Zhao Yang. "The jump is temporary. Inflation is unlikely to become a concern that would limit monetary policy."