Chinese consumer inflation remained flat March, while wholesale prices remained in deflation territory, according to official data released on Friday.
China’s annual consumer inflation rate (CPI) rose 1.4 percent in March from the previous year – the same as February’s increase.
Chinese producer-price index fell by 4.6% in March from the year before, better than the average forecast of a 4.8 percent decline, and a slight improvement from the 4.8% decline in February from a year earlier.
Weak domestic demand and low oil prices has had a significant impact on producer prices.
Many economists expect policymakers to continue to ease monetary policy, through cutting capital requirements and cutting interest rates – which would spur lending.
Shen Jianguang, economist at Mizuho Securities Asia Ltd, told the WSJ:
“There is room for more easing measures—both fiscal and monetary policy—as inflation and economic growth are weak,”
“Inflation pressure on food and nonfood prices is very weak,”
The Chinese government lowered its growth target to 7 percent this year and inflation is projected to be around 3 percent.
Capital economists Chang Liu and Julian Evans-Pritchard said in a note ahead of the release:
“Although we don’t think low inflation in China should be a concern, policymakers don’t appear to hold such a sanguine view,”
Adding:
“The People’s Bank has said that low inflation played into its decision to cut benchmark rates twice since last November.”