China Inflation


Inflation rises in March on higher food prices

In March, consumer prices rose 3.6% over the same month last year, which was above the 3.2% increase registered in February. The print overshot market expectations that had inflation rising to 3.4%. Despite the strong increase, annual average inflation inched down from 5.2% in February to 5.1% in March. The main driver behind the March figure was higher prices for food, which jumped 7.5% over the same month last year (February: +6.7% year-on-year). Meanwhile, core inflation, which strips out volatile food costs, inched up to 1.8% from 1.7% in February, which had marked the lowest level recorded since October 2010. Meanwhile, the producer price index fell 0.3% over the same month last year in March, contrasting the flat reading observed in February, and representing, in fact, the first decline since November 2009. The print, nevertheless, was in line with market expectations. As a result, annual average producer price inflation continued to slow for a fifth month in a row, falling from February's 5.0% to 4.3%. The government expects that inflation will average 4.0% this year.

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