The National Bureau of Statistics said on Thursday that China’s consumer price index (CPI) increased by 0.1% year over year in March, which was less than anticipated. Following yet another dismal report on the consumer price index, this has sparked worries about China’s economic recovery.
On Thursday, the National Bureau of Statistics declared that China’s CPI increased by a pitiful 0.1% in March compared to a 0.7% increase in February.
China has been experiencing erratic inflation since the middle of 2023, vacillating between very low and deflationary rates. China’s CPI has been close to zero in recent months and has not exceeded 3% year-over-year since 2021, in contrast to other countries dealing with post-pandemic inflation.
Beijing must expedite interest rate reductions in light of the low CPI figure, as this might assist ease the mortgage burden on residents and help allocate more funds towards consumption.
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. Since the pandemic, China’s economy has been plagued by a steep correction in property prices and demand, and cautious consumers.
In one indication of the depth of the China real estate market troubles, the Hang Seng Mainland Properties Index, made up of the nation’s largest listed property developers, has fallen 84.5% since its peak in January of 2020.
Additionally, manufacturing purchasing manager index (PMI) reports from China, from Caixin/S&P Global and the NBS, in recent months have pointed to a contracting factory sector, although both indices in March did marginally rise into the expansion zone.
Underlining outlooks that China’s economy is struggling, the Asian Development Bank on Thursday issued an estimate that the nation’s gross domestic product will grow by 4.8% in 2024, below Beijing’s goal of 5%, and slowing from the 5.2% GDP expansion posted in 2023.
Credit-rating agency Moody’s Investors Service recently predicted China’s GDP will expand by only 4% in 2024, and in early March issued a report entitled, “Latest policies are unlikely to revive China’s property sales in the near term.”
Separately, China’s producer price index (PPI), which measures costs of goods at the factory gate, decreased by 2.8% year-over-year in March, the NBS reported. In February the PPI declined by a slightly more modest 2.7% on year.
The decline in producer prices also aggravated worries that economic demand in China is faltering, and that the industrial sector has too much capacity.
