China’s Factory Inflation Slows While Consumer Price Gains Ease

While the consumer price index retreated from a four-year high, China’s factory inflation slowed for a fifth month.

In March, the producer price index rose 3.1 percent from a year earlier, compared with the projected 3.3 percent rise in a survey and 3.7 percent in February. The statistics bureau said on Wednesday that the consumer price index climbed 2.1 percent versus a forecast of 2.6 percent and 2.9 percent in February.

The slowest factory inflation in more than a year may offer limited support to the world reflation cycle, among rising trade tensions that may weigh on synchronized global growth. While tariffs added to imports of U.S. products from soybeans to cars may boost inflation if implemented, domestic consumer prices are forecast to rise this year.

The slower PPI reading is in line with a Bloomberg Economics tracker, which uses daily movements of commodity prices to predict the monthly PPI reading.

Li Wei, a senior economist at Standard Chartered (LON:STAN) Plc in Shanghai said that for now, there’s no sign of China exporting inflation to the world, also he predicts both PPI and CPI will stabilize in the range of 2 percent to 3 percent in the second half of 2018. He added that policy makers won’t focus on inflation this year, instead they’ll prioritize tasks such as cutting leverage.

The statistics bureau said in a statement released with the data that the fading of the Lunar New Year holiday effects in March was the main reason for the CPI deceleration. /bloomberg.com

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