CPI rebound no cause for concern
Print Edition
CHINA’S inflation rebounded in March but analysts are not worried because the rise was expected and generally the inflation remained mild.
The Consumer Price Index, the main gauge of inflation, rose 2.4 percent from a year earlier in March due to higher food costs which rose 4.1 percent last month, the National Bureau of Statistics said yesterday. The pace quickened from the 2 percent rise in February.
The Producer Price Index, the factory-gate measurement of inflation, dropped 2.3 percent in March, widening further from the fall of 2 percent a month earlier. The drop indicated less inflationary pressure in the future.
Zhang Zhiwei, an economist at Nomura, said China’s CPI growth in March was in line with market expectations.
Zhu Haibin, chief economist for China at JPMorgan, said the “benign” inflation condition may provide room to deepen price reform in resource products.
“The authorities have stated that reforming resource product pricing is a major part of a comprehensive deepening reform in 2014, including electricity, natural gas, water and railway cargo prices,” Zhu said. “As food inflation is relatively calm, the government could take the opportunity to move faster in the reform area.”
Zhang said the low inflation may allow for more policy easing in the second quarter.
“But we do not expect the government to roll out new easing measures in April, as it will likely wait to see how the fiscal easing announced over the past several weeks affect the economy,” Zhang said.
Earlier this month, China unveiled tax cuts for small firms and to quicken the construction of railway lines.
On Thursday, Premier Li Keqiang said at the annual Boao Forum in Hainan Province that the top priority is to create jobs.
The government “will not take short-term and forceful stimulus measures in response to momentary fluctuations in the economic growth,” he said. “We will instead focus more on medium to long-term healthy development.”
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