Slower food price rises cool inflation
Reduced pace of price increases may prove short-lived as pig deaths set to push cost of pork higher and workers' wages continue to rise
Inflationary pressures on the mainland fell last month as food price increases slowed, alleviating concerns over any imminent monetary policy tightening.
The consumer price index rose 2.1 per cent from a year ago, less than its 3.2 per cent gain in the first two months of the year, the National Bureau of Statistics said yesterday.
"The lower-than-expected CPI and PPI figures … leave policymakers more room to manoeuvre if activity data, to be released next week, surprise on the downside," said Song Yu, an economist at Goldman Sachs.
China is aiming to strike a balance between boosting economic growth, keeping inflation under control and containing financial risks, according to a government report released last month. The official target for CPI inflation this year is 3.5 per cent.
"Calling for imminent monetary tightening last month turned out to be premature, as inflation pressure is not high, growth momentum is not strong and external conditions are still volatile," said Lu Ting, an economist at Bank of America Merrill Lynch.
However, Lu warned that for the second half of this year and next year higher inflation was likely due to a reduced supply of pork and a steady progression of wage rises for migrant workers.