Chinese inflation ticks up in March

Chinese consumer inflation ticked higher in March, with the help of rising food prices, while the pace of deflation in producer prices moderated from the previous month.

According to China’s National Bureau of Statistics, the official consumer price index rose 2.3 per cent year-on-year in March. This was just below expectations of 2.4 per cent. Consumer prices had risen at the same rate in February, accelerating from 1.8 per cent in January.

Despite a fall in transport and communications prices due to persistently low commodity prices, the headline CPI number was up in March partly due to rising food prices, with fresh vegetable prices rising 35.8 per cent year-on-year to add 0.92 percentage points to the headline figure, while pork prices were up 28.4 per cent, contributing 0.64 percentage points. Another reason given for the rise in CPI was due to a particularly cold winter across China. Core inflation, which does not include food or energy costs, was up 1.5 percent year-on-year.

Meanwhile producer prices fell 4.3 per cent year on year in March – less severe than expectations of -4.6 per cent and up from a reading of -4.9 per cent in February.

While the latest reading of the official producer price index indicates chronic overcapacity remains a serious issue for China’s industrial sector, it also reflects continued improvement since January, when a five-month streak at -5.9 per cent finally snapped.

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