Sluggish Chinese inflation nudges higher
Inflation in China nudged marginally higher last month, official data showed on Thursday, missing forecasts.
According to the National Bureau of Statistics, consumer price index inflation slowed to just 0.1% year-on-year, down from February’s 0.7% rise and below forecasts for a 0.4% increase.
Annual core inflation, which strips out on volatile food and energy prices, was 0.6%, down on February’s 1.2%.
On a month-on-month basis, CPI fell 1%, reversing February’s 1% increase. Analysts had been expected a 0.5% drop month-on-month.
Year-on-year, producer prices fell by 2.8%, adding to February’s 2.7% slide. Month-on-month, PPI was 0.1% lower.
Lynn Song, chief economist, Greater China, at ING, said: "While we believe that data will gradually show that China is not stuck in a deflationary spiral, nonetheless inflation remains well below target, and looking at economic fundamentals alone, we think the economy would benefit from further rate cuts."
China’s economy has stalled in recent years, hit hard by stringent Covid controls, a crisis in the debt-laden property sector and weaker global demand.
In response, Beijing is trying to move the economy away from real estate towards high-end manufacturing. It is targeting GDP growth of 5.2% this year, unchanged on 2023.
On Wednesday, Fitch Ratings cut its long-term outlook for China to ‘negative’ on the country’s “uncertain” economic prospects as it moves away from property-reliant growth.
Fitch expects GDP growth of 4.5% in China in 2024.