China’s consumer price index surged 2.4 percent in March from a year ago, up from an increase of 2 percent in February, reported the National Bureau of Statistics today. This exceeded the median estimate of a growth of 2 percent in a Reuters poll of economists.
The surge in prices was mainly attributed to fresh food prices, as vegetable prices rose 12.9 percent and fruit prices were up 17.3 percent. However, economists said that food prices are showing signs of cooling down. Prices of pork meat plunged 6.7 percent from a year earlier.
Producer prices plunged on year-to-year basis for the 25th consecutive month, falling 2.3 percent, which was more than estimated.
“Overall, we expect inflation pressures to remain benign amid tepid domestic demand,” said economists at Barclays in a report.
The results add to the list of weak data that the Chinese economy has posted this year. So far, Beijing has said it won’t roll out any major stimulus to bolster the economy, although it has crafted smaller measures such as lowering taxes for small businesses.
“The current environment in some ways serves as a litmus test for the government’s commitment to allowing a more “decisive” role for market forces in the economy – market forces would drive up the cost of scarce resources, raising CPI inflation,” Bill Adams, a senior international economist for PNC Financial Services told Reuters in an e-mail.
Consumer price index jumped 2.3 percent in the three months ending March from the same quarter a year ago, which was less than the government’s target of less than 3.5 percent for this year. While Chinese consumer prices have gradually increased, producer prices recently plunged by their steepest margin in March, mostly due to a fall in metal and mining prices. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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