China’s March CPI and PPI post slower advances
Print Edition
CHINA’S consumer inflation slowed and the factory gate prices cooled to a 17-month low in March.
The Consumer Price Index, a main gauge of inflation, rose 2.1 percent year on year last month, 0.8 percentage points slower than February’s, the National Bureau of Statistics said yesterday.
The Producer Price Index, which measures costs for goods at the factory gate, grew 3.1 percent year on year, 0.6 percentage points slower than that in February.
On a month-on-month basis, the CPI dropped by 1.1 percent in March, with food prices down 4.2 percent and reversing the 4.4 percent rise in February.
Sheng Guoqing, a bureau analyst, said that the slower consumer inflation was mainly due to the influence of a moving Chinese New Year.
“After the 52-month high of year-on-year rise in February caused by the moving lunar new year holiday effect, the CPI inflation fell to a much weaker-than-expected 2.1 percent year on year in March, mainly due to falling food prices,” the Nomura Group said in a note yesterday.
Food prices rose 2.1 percent year on year, 2.3 percentage points below February’s, lifting the CPI reading by 0.41 percentage points, data showed.
Rises in non-food prices slowed to 2.1 percent yearly, with the pace retreating 0.4 percentage points from the previous month.
China’s PPI year-on-year growth was 0.6 percentage points lower than February’s.
Sheng said the PPI slowed in the nonmetallic mineral products, non-ferrous and fuel processing industries while coal mining firms and paper product manufacturers saw a faster gain in prices.
Despite the softening in month-on-month consumer prices, economists still maintain their forecast for annual CPI after taking into consideration supportive service prices and moderation of seasonal factors.
“The service and food price indexes dropped 0.7 percent and 4.2 percent month on month respectively in March, but we attribute this to seasonal factors,” Australia and New Zealand Banking Group said in a note. “Looking forward, the service price index should extend its expansionary trend given booming demand.”
ANZ also highlighted the potential impact if China imposes a 25 percent import tariff on US soybeans, though the market broadly believes this would only cause marginal upward pressure on the headline CPI.
ANZ revised down their PPI forecast for 2018 to 4 percent from the previous 4.8 percent as commodity prices have risen more slowly than expected.
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