- Commerzbank AG
China's consumer inflation came in weaker than expected on year in March, while producer prices were better than forecast. The consumer price index rose 2.3% on an annualized basis in March, according to the National Bureau of Statistics, matching February's level and compared with the 2.5% rate expected by economists. The main contributor to growth were food prices, which advanced 7.6%. Producer price declines narrowed to 4.3% from a decline of 4.9% in February, and posted the first month-on-month increase since 2013. Producer prices on a year-on-year basis remained dragged down by falling mining and raw material costs. On month, producer prices climbed 0.5% after more than two years of negative readings.
China's inflation averaged 1.4% in 2015, the weakest reading in six years and well below the government's upper-limit target of 3%. An increase in inflation since last year, though mainly driven by food prices, may extend the People's Bank of China's easing pause. While some price gains may be seasonal and therefore temporary, a property recovery and bounce back in commodity prices suggests the worst of the deflation threat may be over. Gross domestic product growth for the March quarter is due Friday, coupled with industrial production, retail sales and fixed asset investment.
© Dukascopy Bank SA