China Inflation Rises Slightly; Producer Price Inflation Moderates

Ray Weaver
April 13, 2017

China's consumer inflation rose to 0.9 percent year-on-year in March, from 0.8 percent in the previous month, data released by the National Bureau of Statistics showed on Wednesday.

The Consumer Price Index (CPI) measure of inflation is expected to come in at 2.3% in March, according to consensus estimates, matching February's figure but up from 1.8% in January.

Consumer food price inflation moderated to 1.93 per cent, as compared to 2.01 per cent in February.

Commenting on today's prices data, ONS Deputy National Statistician Jonathan Athow jathers said ONS (ONS) April 11, 2017 Retail sales fell 1.0 percent in March from a year earlier on a like-for-like basis.

The inflation rate for March was also the joint highest figure since September 2013, and above the Bank of England's two per cent target for inflation. Accordingly, we continue to think that CPI inflation will climb to about 3.5% by the end of this year, thereby peaking earlier and higher than the MPC expects.

"This could be partly due to the supermarket price wars in the United Kingdom over this period which resulted in a downward pressure on food prices".

Inflation has jumped in the past year because of the pound's decline since the Brexit vote and that, coupled with lackluster wage growth, is eating into the spending power of consumers, the engine of the economy. The costs of garments, healthcare, housing and education, entertainment and transport rose remarkably.

It is also important to note that inflationary pressures have been experienced across the region and have also been attributed to poor performance in the agriculture sector and increase in crude oil prices.

'It is no surprise UK CPI remained flat in March as neither energy prices nor sterling moved significantly over the month.

Stephen Clarke, economic analyst at the Resolution Foundation, said: "The recent run of escalating inflation may have paused for now, but that has more to do with the timing of Easter than any change in the strong upward pressure on prices that is likely to dominate through 2017".

The annual increase is slower than the average growth of 7.3% seen in 2016. People's real incomes still haven't recovered from the financial crisis because of low wage growth and high living costs and those on low incomes are suffering the most. Davy economist Conall Mac Coille said: "Despite the popular view that the United Kingdom economy has been left relatively unscathed by Brexit forecasts, consumers are subdued", he said.

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