China worries: inflation shoots to 3.6%
China’s annual inflation rate hit 3.6% in March, with volatile food prices leading a temporary rebound that pushed costs above expectations but left intact the view that Beijing has the flexibility to ease monetary policy to support growth.business Updated: Apr 09, 2012 22:01 IST
China’s annual inflation rate hit 3.6% in March, with volatile food prices leading a temporary rebound that pushed costs above expectations but left intact the view that Beijing has the flexibility to ease monetary policy to support growth.
The view that a cooling economy has eclipsed inflation as Beijing’s biggest near-term worry was further reinforced by surprisingly soft producer prices, which fell 0.3% from a year ago, sparking concerns that it indicated weakening demand.
Analysts said Monday’s price data suggested China’s inflation is set to moderate rather than slow dramatically in coming months, and that Beijing will likely meet its 2012 inflation target of 4% even as it slowly loosens policy.
“Nothing in this (March) number looks like it is pushing me away from the comfortable view that inflation is on a downtrend,” said Tim Condon, head of Asian economic research at ING in Singapore.
“The overall trend is that food is going to be dragging down the consumer price index over the course of the entire year,” he said.
Economists polled by Reuters had forecast China’s consumer inflation to run at 3.3% in March from a year ago, compared with February’s 3.2%, while producer prices were seen easing 0.2%.
A breakdown of the data by the National Bureau of Statistics showed that food prices were the biggest driver of inflation, although some price pressures were tapering off. The price of pork, a staple in the Chinese diet, surged 11.3% from a year ago, but fell 4.8% from February. Vegetable prices, on the other hand, were up 6% from a month earlier and soared 20.5% in March.
First Published: Apr 09, 2012 21:58 IST