Chinese inflation hit 5.4% in January, surging to its highest level in over eight years, as the country contends with continued anxiety over the outbreak of coronavirus.
Compared to the same month in 2019, food prices climbed the most since 2008, according to China’s National Bureau of Statistics.
Lunar New Year celebrations pushed up demand, while coronavirus and African Swine Fever, which has dented pork stocks, reduced supply.
Supermarkets in the country have been cleared out in recent weeks, with anxious shoppers rushing to stock up on staples amid a panic-buying spree.
Supply disruptions and factory closures, meanwhile, are also factors pushing up prices.
But concerns about social unrest prompted the Chinese government to open “green passages” to ensure smooth delivery of provisions and supplies.
Dong Lijuan, an analyst with the bureau, said that the jump in inflation was driven by the usual uplift associated with the Lunar New Year celebrations and the coronavirus outbreak.
China’s National Health Commission said on Monday that the death toll from coronavirus had now risen to over 900, with the total number of confirmed infections in the country now approaching 40,200.
Around 3,000 new cases were recorded in the past 24 hours, with most of them arising in Hubei province, the epicentre of the virus outbreak.
Inflation in the province, at 5.5%, was only slightly higher than the national average.
While the country had extended the Lunar New Year holiday in the hopes of containing the spread of the virus, workers were due to head back to work on Monday.
However, many factories have not yet come back online.
“The pace of this process could be telling in the eventual economic impact of the health crisis so markets are likely to be following events closely,” said Russ Mould, the investment director at AJ Bell, on Monday.
“One of the first announcements on the Chinese economy since the outbreak began was released this morning, notably showing a big rise in inflation as food prices soared,” he said.
“And with the World Health Organisation warning that we may only have seen the tip of the iceberg in terms of coronavirus cases outside China, equities still look vulnerable to further weakness.”