China’s inflation rate slowed last month, official data showed yesterday, as policymakers struggle to jumpstart persistently low spending in the world’s second-largest economy.
The consumer price index (CPI) last month edged up by 0.1 percent year-on-year, the Chinese National Bureau of Statistics said, below the 0.4 percent gain forecast by a Bloomberg poll of analysts.
“In March, under the impact of factors such as the seasonal decline in consumer demand after the holidays and the overall sufficient market supply, the increase in the nationwide CPI ... somewhat declined,” the bureau said.
Photo: EPA-EFE
The figure represented a slower rate of growth from 0.7 percent in February, when consumer prices emphatically bucked a deflationary trend stretching back to August last year.
Core inflation, which strips out volatile food and energy prices, slowed to 0.6 percent last month from 1.2 percent in February, the bureau said.
The slowdown “indicates that China still faces the risk of deflation, as domestic demand remains weak,” Pinpoint Asset Management Ltd (保銀私募基金管理) chief economist Zhang Zhiwei (張智威) said.
“Fiscal spending has been weak so far this year. Export growth by itself cannot boost aggregate macro activities without help from more supportive fiscal policy,” Zhang said.
In a sign that deflation could continue to haunt the economy in the next few months, price competition in some industries has intensified.
Firms that produce materials for construction, such as zinc smelters, have been forced to lower their charges because of excess capacity, while producers of electric vehicles are offering aggressive discounts to lure customers.
With the housing market slump showing no signs of a turnaround, subdued demand for building materials such as steel is dragging producer prices down.
The producer price index continued to fall last month, down 2.8 percent year-on-year, with metal smelting and pressing costs falling at an annual rate of 7.2 percent, while mining and washing of coal — used for steelmaking — tumbled 15 percent, the most among all main industries, the bureau said.
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