China March factory, consumer inflation slows in sign of ebbing economic growth

FAN Editor
FILE PHOTO - A woman shops for groceries at a supermarket in Beijing
FILE PHOTO – A woman shops for groceries at a supermarket in Beijing, China, July 9, 2015. REUTERS/Kim Kyung-Hoon

April 11, 2018

BEIJING (Reuters) – China’s producer price inflation continued cool in March, slowing to a 17-month low and backing expectations of a broader slackening in economic growth this year.

Consumer inflation also eased in the previous month as the effects of booming demand spurred by the Lunar New Year holiday in February receded, official data showed on Wednesday.

There are some worries that an escalating trade dispute between China and the United States could push up inflation over the coming months, though many analysts believe any impact on consumer prices will be limited.

The producer price index (PPI) rose 3.1 percent in March from a year earlier, compared with 3.7 percent in February, the National Bureau of Statistics (NBS) said.

China’s factory-gate inflation has now softened for five months in a row, supporting the view that a slowdown in the world’s second largest economy is inevitable, weighed down by the cooling property market and rising borrowing costs.

Analysts polled by Reuters had expected March producer inflation would moderate slightly to 3.2 percent.

On a month-on-month basis, the PPI fell 0.2 percent, while for the first three months of this year it rose 3.7 percent from a year ago. 

The consumer price index (CPI) rose 2.1 percent from a year earlier, below expectations of 2.6 percent and slowing from February’s gain of 2.9 percent, which was driven by a spike in tourism and transport costs during the Spring Festival.

On a month-on-month basis, the CPI declined 1.1 percent.

The core consumer price index, which strips out volatile food and energy prices, rose 2.0 percent in March, down from 2.5 percent in February. The food price index rose 2.1 percent from a year earlier, after rising 4.4 percent in February.

The tit-for-tat tariffs between China and the United States have fueled worries about the inflation outlook.

However, a researcher from China’s National Development and Reform Commission said that Beijing’s proposed tariffs on U.S. soybeans and pork will have limited impact on consumer price inflation.

Analysts are also still forecasting broad price pressures to ease as a slowdown in credit growth is feeding through to an overall softening in economic activity.

China’s central bank governor Yi Gang said last month he expected consumer inflation pressures to be mild this year, and that producer price increases will slow down.

(Reporting by Lusha Zhang, Stella Qiu and Elias Glenn; Editing by Shri Navaratnam)

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