(dpa-AFX) – China’s consumer price inflation turned positive in March largely due to a rise in fuel prices and the factory gate inflation rose the most in more than two years driven by higher global commodity prices.

Consumer prices rose to 0.4 per cent year-on-year in March, reversing a 0.2 per cent drop in February, data from the National Bureau of Statistics showed on Friday.
This was also faster than the expected 0.3 per cent.

The government has set consumer price growth target of about 3 per cent for this year. After a 0.2 per cent drop, food prices slid at a faster pace of 0.7 per cent in March due to fall in pork prices in February.

Meanwhile, non-food prices grew 0.7 per cent.

Core consumer prices, excluding volatile food and energy, advanced 0.3 per cent after staying flat in February.

On a monthly basis, consumer prices dropped 0.5 per cent, in contrast to February’s 0.6 per cent rise. Economists had forecast a 0.4 per cent fall for March.

Looking ahead, consumer price inflation is forecast to rise to around 2 per cent by the end of the second quarter, Julian Evans-Pritchard and Sheana Yue, economists at Capital Economics, said.

Shifting pork price base effects and continued disruptions to pork supply from African Swine Fever will nudge up food inflation, the economist added.

Data showed that producer price inflation accelerated sharply to 4.4 per cent in March from 1.7 per cent in February.

The latest factory gate inflation was the fastest since July 2018. Economists had forecast the rate to rise moderately to 3.5 perc ent.

Month-on-month, producer prices were up 1.6 per cent in March. Producer price rises are likely to broaden out in the coming months and push headline CPI back to more normal levels, economists at Capital Economics noted.

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