China CPI inflation eases further in March, PPI shrinks
2023.04.10 22:45
© Reuters.
By Ambar Warrick
Investing.com– Chinese consumer inflation read weaker than expected in March, while producer price inflation contracted at a steady pace amid growing signs that a post-COVID economic recovery in the country, especially in the manufacturing sector, was losing steam.
China’s (CPI) grew 0.7% in March, slower than expectations of 1%, as well as the prior month’s reading of 1%, data from the National Bureau of Statistics showed on Tuesday.
On a monthly basis, fell 0.3% in March from the prior month.
The reading showed that consumer spending was still struggling to pick up despite the lifting of anti-COVID restrictions, as well as measures by the government to shore up spending. Consumer spending is a key driver of the Chinese economy, and is yet to fully recover from the COVID pandemic, which had seen the country endure three years of lockdowns.
Weak (PPI) also indicated further that a rebound in manufacturing activity was running out of steam. PPI inflation fell 2.5% in March as expected, after falling by a similar pace in February.
The reading comes in line with data that showed Chinese struggled to expand through March. The manufacturing sector is a bellwether for the Chinese economy, and is now close to contraction territory after an initial post-COVID bounce.
Chinese factories are also grappling with weak overseas demand amid worsening economic conditions across the globe, which has in turn dented Chinese exports.
Data due later this week is expected to show that Chinese continued to shrink through March, although are expected to improve after four straight months of declines.
The fell 0.1% after Tuesday’s reading, as weak inflation gives the People’s Bank of China less economic headroom to hike interest rates. The central bank had loosened monetary policy substantially last year to support economic growth, which had in turn dented the yuan.
Tuesday’s reading, coupled with recent signs of slowing growth in China’s manufacturing sector, indicates that an economic rebound in the country may not be as pronounced as markets are hoping.
