China's consumer inflation speeds up in February

China's consumer inflation accelerated in February, rebounding from a five-year low in January, but factory prices remained entrenched in deflation, signalling a favorable environment for further stimulus from the government

The consumer price index (CPI) rose 1.4 percent on year, beating expectations of a 0.9 percent rise predicted in a Reuters poll and following a 0.8 percent climb in January.

But wholesale prices, or the producer price index (PPI), fell 4.8 percent in February, worse than the average forecast of a 4.3 percent fall, and after dropping 4.3 percent in January.

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Markets opened lower as the data was released. The Shanghai Composite opened down 0.5 percent to a one-week low, while the Hang Seng index slipped 0.3 percent.

"We got a higher number and that's reflecting the Lunar New Year effect. So we have to look at the January and February average, and maybe even the March number as well [to get a clearer picture of inflation]," Grace Ng, economist of Greater China at JPMorgan, told CNBC.

"Overall, we still have pretty contained inflation pressure so that means we still have room to move for monetary policy side," she added.

A plunge in oil prices, weak consumption and a slowing property sector have driven prices lower in recent months, even as China's economy braces for slower growth this year.

Beijing last week set a growth target of around 7 percent for this year. China's economy expanded 7.4 percent in 2014, its slowest pace in 24 years.

The consumer price index target was set at around 3 percent for this year. Annual consumer inflation was 2 percent in 2014, well below the government's target of 3.5 percent.

The People's Bank of China has injected monetary stimulus three times since November – by the way of two interest rate cuts and reducing the reserve requirements of major banks – in a bid to support growth.