China: Inflation ebbs in March from February
Latest reading: Consumer prices were up 1.0% on a year-on-year basis in March, following a 1.3% increase in the prior month. The reading was below market expectations. An increase in transport costs linked to higher global energy prices underpinned inflation, while housing costs continued to decline. Moreover, food price pressures softened following the end of the Lunar New Year festival.
Consumer prices were down 0.70% in March on a month-on-month basis, following a 1.00% rise in the prior month.
Panelist insight: On the outlook, Nomura analysts said:
“We have raised our CPI and PPI inflation forecast to 0.6% and 1.0%, respectively, from 0.4% and -1.0%, reflecting the surge in global oil and gas prices, alongside rising prices of non-ferrous metals, memory chips and raw materials targeted by the anti-involution campaign. These reflationary forces could be welcomed by Beijing, following three years of protracted deflationary pressures. However, supply side-driven reflation risks further compressing corporate profit margins and dampening household consumption demand.”