China: Consumer price inflation increases in March; producer inflation dips
Consumer prices were flat in March over the previous month, coming in below the 0.60% rise seen in February. The reading was primarily driven by dropping prices for food—particularly pork—offsetting higher transport prices.
Consumer inflation came in at 1.5% in March, which was up from February’s 0.9%. March’s figure represented the highest inflation rate since December 2021. Meanwhile, the trend pointed up mildly, with annual average inflation coming in at 1.2% in March (February: 1.1%). Finally, producer price inflation fell to 8.3% in March, from February’s 8.8%, driven by a notably tougher base effect, although a higher month-on-month increase in producer prices was testament to shocks in international commodity markets.
Looking forward, notwithstanding higher international food and energy prices, consumer price inflation will likely stay subdued on limp domestic demand. Meanwhile, producer price inflation should gradually trend down on a base effect, given increasingly high producer price inflation readings as last year progressed, despite Covid-19-induced supply difficulties and an unfavorable international price environment.