China Inflation


Inflation slows in March on lower food prices

In March, consumer prices increased 2.1% over the same month last year. The reading was well below the 3.2% rise observed in February, which had represented the highest inflation rate since April 2012, and undershot market expectations that had prices rising 2.5%. According to the statistical office, inflation moderated on the back of lower prices for food, in particular for pork and fresh vegetables.

Building on the soft annual increase, inflation resumed its downward trend, with annual average inflation falling from February's 2.4% to 2.3%.

On 26 March, the National Development and Reform Commission, which is in charge of setting fuel prices, unveiled a cut in the maximum retail prices for gasoline and diesel and announced changes in the pricing mechanism. From 27 March, oil prices will be adjusted more frequently and the 4% threshold for triggering revisions will be eliminated.

Meanwhile, in March, the producer price index fell 1.9% over the same month last year. The print matched the result expected by market analysts but exceeded the 1.6% drop tallied in February. As a result of the monthly drop, the annual average variation of the producer price index fell further from minus 2.1% in February to minus 2.2% in March.

The government expects that inflation will average 3.5% this year. FocusEconomics Consensus Forecast participants anticipate inflation to average 3.3% in 2013, which is unchanged from last month's estimate. In 2014, the panel sees inflation rising to 3.6%.

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China Inflation Chart

China Inflation March 2013

Note: Year-on-year and annual average variation of consumer price index in %.
Source: National Bureau of Statistics of China (NBS).

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