BEIJING, China – China’s consumer inflation edged up in March as food prices rose despite signs the world’s second-largest economy is slowing.
Consumer prices rose 2.4 per cent compared with a year earlier, up from February’s 2 per cent rise, government data showed Friday. The increase was driven by a 4.1 per cent rise in politically sensitive food costs.
Producer prices, measured as goods leave the factory, fell by 2.3 per cent in a sign of weakening economic growth, the National Bureau of Statistics reported. It was their 25th straight month of decline.
Inflation still is well below the official target for the year of 3.5 per cent, leaving Beijing room to stimulate the slowing economy with interest rate cuts or other measures if necessary.
China’s imports shrank 11.3 per cent in March in a sign of weak domestic demand while manufacturing failed to pick up as it usually does following the end of the Lunar New Year holiday.
On Thursday, Premier Li Keqiang ruled out new economic stimulus in response to short-term economic fluctuations.
In a speech, Li appeared to try to prepare companies and the public for the possibility China might fall short of its 7.5 per cent official economic growth target this year. He said growth might come in above or below the target.
Relatively low inflation could give Beijing room to carry out promised reforms to make prices of electric power, gas, water and other resources more market-oriented, said JP Morgan economist Haibin Zhu in a report. That is intended to make the economy more efficient and productive by removing hidden subsidies that encourage waste.
“The government could take the opportunity to move faster in this reform area,” said Zhu.
The steady decline in producer prices “seems more worrying,” said Zhu. He said it reflects a glut of excess supply in a number of industries that is depressing profits and could dim prospects for a rebound in investment this year.
Communist leaders are trying to steer the economy to slower, self-sustaining growth based on domestic consumption instead of exports and investment.
Growth last year of 7.7 per cent tied 2012 for the lowest since 1999.
Unexpectedly weak performance, especially in trade, has prompted suggestions Beijing might face a rise in job losses that could force it to backtrack and prop up growth with renewed stimulus.
In a sign of official concern, the government launched a mini-stimulus last month based on higher spending on construction of railways, low-cost housing and other projects.
National Bureau of Statistics (in Chinese): www.stats.gov.cn