The news: China’s core consumer price index (CPI) contracted in February for the first time since 2021—underscoring the deflationary pressures its economy faces as businesses cut prices to attract reluctant shoppers.

Overall CPI fell 0.7% YoY, per the National Bureau of Statistics—a larger drop than the 0.5% decline economists expected and a complete reversal of January’s 0.5% YoY gain. Economists expect prices to fall for the third year in a row in 2025, which would be the longest deflation streak since the 1960s.

The caveat: Some of the weakness in CPI is due to the shift in timing for Lunar New Year, which began in late January this year but took place entirely in February in 2024. That meant prices were being compared with a higher base, exacerbating the YoY decline.