Inflation Trends - Inflation continues to accelerate, with February CPI at 1.3%, up from 0.2% previously, and PPI at -0.9%, an improvement from -1.4%[2] - The simulated monthly deflation index for February 2026 is 0.42%, marking the first positive reading in 36 months, one month earlier than expected[2] - The monthly simulated deflation index turned negative in March 2023 at -0.58%, reaching a low of -2.16% in June 2023, before gradually recovering[2] Price Movements - CPI for February 2026 shows a month-on-month increase of 1.0%, consistent with previous years (2015, 2018, 2024) at 1.2%, 1.2%, and 1.0% respectively[2] - Key contributors to CPI increases include air travel (31.1%), travel agency fees (15.8%), and gold jewelry (6.2%)[4][3] - PPI shows a month-on-month increase of 0.4%, marking the fifth consecutive month of positive growth, with notable increases in mining (1.2%) and processing industries (0.6%)[8] Future Outlook - March inflation data is expected to remain favorable due to rising oil prices, with Brent crude increasing from $72.5 to $92.7 per barrel[10] - The South China Industrial Product Index has shown an upward trend, averaging 3902 in March compared to 3656 in February[11] - Risks include potential external economic shocks, geopolitical tensions, and fluctuations in commodity prices that could impact downstream pricing[12]

Manufacturing Sector - In December 2025, the manufacturing PMI increased by 0.9 points to 50.1, significantly above the seasonal trend where the average decline over the past 10 years was 0.3 points[3] - Only 4 out of 15 sub-sectors are in the expansion zone, a decrease of 4 from November, with specialized equipment, non-metallic mineral products, and agricultural products falling below the prosperity line[3] - High-tech manufacturing PMI rose to 52.5, up 2.4 points from the previous month, indicating strong growth in this sector[3] Industry Performance - The pharmaceutical, automotive, textile, and computer communication sectors lead in prosperity, with PMI values between 55-60, while the chemical, metal products, and non-metallic mineral sectors are between 45-50[4] - The pharmaceutical sector's production and demand may be influenced by the flu season, while the petrochemical sector stabilized with a production increase of 15 points[5] - The electrical machinery sector saw a 1.3-point increase in PMI, driven by strong demand in home appliances and new energy sectors[6] Emerging Industries - Emerging industries such as biotechnology, new energy vehicles, and next-generation information technology maintain high prosperity levels, with biotechnology PMI rising by 2.7 points[7] - Among seven emerging industries, biotechnology has the highest prosperity level at 60, while new energy vehicles and next-generation information technology are between 50-55[7] Construction Sector - The construction sector's PMI rose by 3.2 points to 52.9, marking a return to expansion after four months[9] - The real estate sector saw a slight increase of 0.5 points, with construction activities improving due to favorable policies and funding availability[8] - New orders in the construction sector increased by 1.3 points, with real estate new orders rising by 8.2 points[10] Service Sector - The service sector's business activity index increased by 0.2 points to 49.7, with online information technology services and postal services leading the growth[12] - The hospitality and catering sectors experienced the lowest prosperity levels, with indices below 45, reflecting weak consumer activity[12] - The financial services sector remains strong, with indices above 60, indicating robust performance in monetary and capital market services[12]