China's consumer price index rose 0.9 percent year-on-year in February, as it did in January; while the producer price index increased 8.8 percent year-on-year, 0.3 percentage points lower than the previous month, according to the National Bureau of Statistics.

Although the overall price level remained stable and the structural inflationary pressure continued to ease, the country needs to pay attention to the rising price pressure of imported industrial raw materials caused by rising international commodity prices.

That core CPI and service price increases have moderated indicates weak terminal demand. The core CPI rose 1.1 percent year-on-year in February, down 0.1 percentage points from the previous month, indicating that consumer prices excluding energy and food have declined and consumer demand remains weak. Recently, the epidemic has affected offline and outdoor consumption, which is highlighted by the decrease of service prices in the CPI.

On a month-on-month basis, the PPI rose 0.5 percent in February, or 0.7 percentage points faster than the month before. This was mainly due to the impact of international factors, as the prices in the oil exploration, refined petroleum products manufacturing, non-ferrous metal smelting and rolling processing industry rose significantly.

While the year-on-year rise in the PPI has been falling, CPI inflation has remained basically stable, and the gap between the two has narrowed for four consecutive months, indicating that the overall price level has fallen and structural inflationary pressure has eased.

The year-on-year gap between the prices of means of production and means of living continues to narrow, indicating that price increases are gradually being passed from the producer side to the living side. However, the price increase of living materials is still low, as the terminal demand is still weak, and the price transmission effect is weak.

China should pay attention to the imported upward pressure on the PPI caused by the volatile international environment. The Ukraine crisis is stoking energy and agricultural product price hikes, which is increasing the global inflationary pressure. As such, European countries are likely to be most affected, followed by those in North America and Asia.

Thanks to the healthy fundamentals of its economy, China is able to maintain the stability of most of its products and services. Generally speaking, China faces more upward pressure on the PPI than on the CPI, particularly in the industries that rely heavily on imported raw materials, such as crude oil, nonferrous metals and chemical engineering materials.