The pace of Chinese consumer and producer price inflation accelerated in March.
Data issued on Friday by the National Bureau of Statistics revealed the Consumer Price Index rose 0.4% in March compared to a fall of 0.2% in February.
On a month-on-month basis, the CPI fell 0.5% in March (against a rise of 0.6%) in February as food prices fell, thanks to an 19% plus drop in the price of pork.
March’s fall was the first drop in five months.
China’s producer price index (PPI) rose an annual 4.4% in March more than doubling the 1.7% rise in February.
The rise in the PPI was the fastest in three years.
On a monthly basis the PPI rose 0.8% from February. Raw material prices jumped more than 10% in March against a 2.9% rise in February, suggesting the rise in commodity prices (oil, iron ore, copper) is hitting Chinese manufacturers
Data last week showed China’s manufacturing activity expanded at the quickest pace in three months in March as factories ramped up production to keep up with improving global demand.
Activity in the services sector was also solid – although the rate of expansion in China was weaker than in the US economy.
The inflation reports kick off the March monthly and quarterly economic data on trade (Tuesday), production, investment and retail sakes next Thursday and first quarter GDP next Friday.
Some economists reckon the sharp rise in the PPI suggests a faster pace of activity in manufacturing and a GDP reading around 8% instead of just over 6%.
