As expected Chinese cars sales slowed sharply, consumer costs picked up a bit and producer price inflation eased in March.
China’s producer price growth slowed from the eight year high in February to a slightly more sedate pace in March for the seventh straight monthly increase at an annual 7.6%, down 0.2 percentage points from February.
Consumer costs inflation edged higher – rising at an annual rate of 0.9% last month from 0.8% in February as continuing good and early harvests of fresh fruit and vegetables sent retail prices lower.
In month-on-month terms, consumer prices fell 0.3%, a touch sharper than the 0.2% contraction seen in February.
China’s national statistics bureau said the month-on-month deflation was driven by falling fresh food prices – the sub-index for which dropped 2.4% in March and dragged the headline figure down by 0.74 percentage points.
Pork prices fell 3.5% (they were higher in 2016 for much of the year) and fresh vegetables dropped 7.9%, prompted by the continuing unusually warm temperatures across the country, which led to the appearance of unexpectedly early bumper crops in Chinese shops starting in February.
The mild year-on-year rise by consumer inflation was blamed on a 4.4% in food prices, with vegetable prices down 27% thanks in part to a cold snap that damaged crops early last year and higher pork prices.
Non-food inflation rose 2.3% which is a more accurate measure of underlying consumer inflation in the country – but nothing to worry about..
And China’s car sales slowed sharply in March thanks to the continuing impact of a higher sales tax on the world’s biggest car market.
Sales of vehicles, excluding those typically used for commercial purposes rose 1.7% to 2.1 million units in March from the same month in 2016.
That was sharply down from the 6.3% growth in the first two months of the year. By comparison, sales grew nearly 10% in March 2016 from the March 2015. That dragged forward demand from this year.
Car sales in China rose at their fastest pace in three years in 2016, thanks to a sales tax cut that ended at the end of the year. Buyers of cars with engines up to 1.6 litres last year paid a 5% purchase tax. This year, buyers of such cars will pay a 7.5% rate. This sow down is expected to continue for most of the this year.
