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China inflation eases sharply, economists say
By Wang Yanlin |
April 3, 2013, Wednesday
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Online Edition
Online Edition
CHINA'S inflation rate may exhibit a sharp moderation in March due to falling food costs and a weaker-than-expected economic recovery, analysts said before the key data set to be unveiled starting next Tuesday.
The Consumer Price Index, the main gauge of inflation, will likely expand 2.2 percent from a year earlier last month, down from February's 10-month high of 3.2 percent, said Lu Zhengwei, chief economist at Industrial Bank.
The decreasing food costs after the Chinese Spring Festival were the key reason as data from the Ministry of Commerce showed prices of sea food, vegetable, pork and eggs have plunged by the second strongest rate since July, 2008.
Lian Ping, chief economist at Bank of Communications, expected the inflation rate may cool to around 2.5 percent last month -- also because of cheaper food prices which may drop 1.5 percent from a month earlier.
But Lian said March will be the bottom of this round of slowdown, with rates likely to steadily increase in the coming quarters.
"The recent economic fluctuations around the globe have led to falling prices of commodities. But with the stabilization of United States and European economies, which in turn support the Chinese performance, inflation in China will strengthen," Lian said.
Lian projected the Producer Price Index, which gauges the factory-gate inflation, will land at a negative 2 percent in March and then turn positive in the middle of this year.
Exports, the surprising star sector in the previous two months, may retreat to a single-digit growth, Industrial Bank's Lu said.
"Weaker trade has been reflected in the volume of shipments between China and European, Mediterranean and American routes in the past month which only used less than 70 percent capacity," Lu said.
He forecast exports may gain 6.5 percent on an annual basis in March, much less than February's surge of 21.8 percent. Imports may drop 0.5 percent, recovering from the 15-percent drop in February.
There has been a debate over whether China should continue a relatively supportive policy stance to aid growth. The data for March, as well as for the first quarter, will be vital for the policymakers to make a decision, analysts said.
China's growth is expected to accelerate to above 8 percent in the first three months, from 7.9 percent in the fourth quarter of last year.
The Consumer Price Index, the main gauge of inflation, will likely expand 2.2 percent from a year earlier last month, down from February's 10-month high of 3.2 percent, said Lu Zhengwei, chief economist at Industrial Bank.
The decreasing food costs after the Chinese Spring Festival were the key reason as data from the Ministry of Commerce showed prices of sea food, vegetable, pork and eggs have plunged by the second strongest rate since July, 2008.
Lian Ping, chief economist at Bank of Communications, expected the inflation rate may cool to around 2.5 percent last month -- also because of cheaper food prices which may drop 1.5 percent from a month earlier.
But Lian said March will be the bottom of this round of slowdown, with rates likely to steadily increase in the coming quarters.
"The recent economic fluctuations around the globe have led to falling prices of commodities. But with the stabilization of United States and European economies, which in turn support the Chinese performance, inflation in China will strengthen," Lian said.
Lian projected the Producer Price Index, which gauges the factory-gate inflation, will land at a negative 2 percent in March and then turn positive in the middle of this year.
Exports, the surprising star sector in the previous two months, may retreat to a single-digit growth, Industrial Bank's Lu said.
"Weaker trade has been reflected in the volume of shipments between China and European, Mediterranean and American routes in the past month which only used less than 70 percent capacity," Lu said.
He forecast exports may gain 6.5 percent on an annual basis in March, much less than February's surge of 21.8 percent. Imports may drop 0.5 percent, recovering from the 15-percent drop in February.
There has been a debate over whether China should continue a relatively supportive policy stance to aid growth. The data for March, as well as for the first quarter, will be vital for the policymakers to make a decision, analysts said.
China's growth is expected to accelerate to above 8 percent in the first three months, from 7.9 percent in the fourth quarter of last year.
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