Thursday’s data maintains pressure on policy-makers in China to launch more stimulus as demand remains weak
China ’s consumer inflation cooled more than expected in March, while producer price deflation persisted, maintaining pressure on policy-makers to launch more stimulus as demand remains weak.
Data over the January-February period and factory surveys for March showing improving demand had been a relief for Chinese officials seeking to spur a feeble post-COVID recovery, but economists warned of Lunar New Year distortions. Producer prices in March fell 2.8 per cent year on year, widening a 2.7 per cent slide the previous month and extending a year-and-a-half long stretch of declines. On a month-on-month basis, PPI fell 0.1 per cent.
Annual core inflation, excluding volatile food and energy prices, was at 0.6 per cent in March, slower than 1.2 per cent in February. The CPI fell 1.0 per cent month-on-month, cooling from a 1 per cent gain in February and worse than a 0.5 per cent drop forecast by economists. “While we believe that data will gradually show that China is not stuck in a deflationary spiral, nonetheless inflation remains well below target, and looking at economic fundamentals alone, we think the economy would benefit from further rate cuts,” said Lynn Song, chief economist for Greater China at ING.
China Economy Economist Demand Prices Bank Consumer Greater China National Bureau Of Statistics Economist Intelligence Unit
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