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ING economists Lynn Song and Min Joo Kang anticipate China’s February CPI inflation to rise to 1.0% year-on-year, driven by Lunar New Year seasonal effects. They note that higher oil prices may contribute to inflation later in the year. The Lunar New Year holiday typically boosts consumption, temporarily elevating prices for food and services. However, underlying inflationary pressures remain weak, with core CPI likely unchanged near 0.6%. This data suggests a fragile economic recovery in China, which could influence global markets. Traders should monitor how policymakers respond to inflationary signals, as well as the interplay between energy prices and consumer demand. A sustained recovery in China’s economy could bolster global growth, particularly in commodity markets, while a weak rebound might delay central bank rate-cutting cycles. For investors, the focus shifts to upcoming trade data and policy adjustments. If inflation stabilizes and economic activity improves, it could support risk-on sentiment. Conversely, persistent weakness may pressure central banks to delay tightening, impacting currency valuations. Key indicators to watch include China’s Q1 GDP growth and the trajectory of global oil prices.
