China Inflation Slows; Producer Prices Rise For First Time Since 2022
(RTTNews) - China's consumer price inflation moderated in March as demand weakened typically after the Lunar New Year holiday, while producer prices exited deflation for the first time since 2022 as the Middle East conflict pushed up oil prices.
Consumer prices rose 1.0 percent year-on-year in March, the National Bureau of Statistics reported Friday. This was slower than the 1.3 percent growth seen in February and economists' forecast of 1.2 percent.
Food prices grew only 0.3 percent due to an 11.5 percent decline in pork prices. Core inflation, which excludes volatile food and energy prices, increased 1.1 percent from the previous year.
On a monthly basis, consumer prices declined 0.7 percent, in contrast to the 1.0 percent increase in the previous month. The fall was also sharper than the forecast of a 0.2 percent decrease. Producer prices increased 0.5 percent in March from the previous year, marking the first increase since September 2022. Prices were expected to grow 0.4 percent.
ING economist Lynn Song said higher inflation in the near term could keep the People's Bank of China sidelined a little longer than expected, though growth is likely to outweigh inflation in the policymaking calculus.
"If domestic indicators continue to deteriorate, we don't think the recent reflation will prevent further rate cuts," the economist said. Nonetheless, the economist moved rate cut forecast from the second quarter to the third last month, with global central banks largely in a wait-and-see mode.
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