China’s Factory Inflation Eases as Commodities Rebound Weakens

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China’s producer price gains slowed last month from a peak in February, decelerating for the first time since September 2015 and tempering the global inflation outlook.

Key Points

  • The producer price index rose 7.6 percent last month from a year earlier, compared with the median estimate of 7.5 percent in a Bloomberg survey and a 7.8 percent increase in February
  • The consumer price index rose 0.9 percent in March, compared with a 0.8 percent gain in February

Big Picture

Slowing factory inflation may dent optimism about a recovery in global demand, and curb China’s contribution to worldwide reflation. The rebound in recent quarters had provided the government respite to rein in borrowing, tighten monetary policy, and cool a frenzy of speculation in the housing market.

Economist Takeaways

"It looks like there’s a lot of inflation momentum at the producer level, which is good because they’ll have higher profits and more money to invest," Dariusz Kowalczyk, a senior economist and strategist at Credit Agricole SA in Hong Kong, said in a Bloomberg Television interview. "It seems like PPI has peaked, it will remain fairly high in the second quarter and begin to slide in the second half of the year when base effects are out of the way."

The Details

  • Producer prices fell month-on-month for the third time this year
  • The momentum of producer price hikes in key sectors has started easing, according to a statement released on NBS website

Read more: www.bloomberg.com

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