Economists React: Inflation Creeps Back Up-wsj 4/9 : 중국 3월 소비자물가 상승 이코노미스트 금리,통화정책 전망

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Reuters

China’s consumer price index rose 3.6% in March from a year earlier, quicker than February’s 3.2% rise and above expectations, data from the National Bureau of Statistics showed Monday. Meanwhile, China’s producer price index, a gauge of inflation at the wholesale level, fell 0.3% in March from a year earlier, after a flat reading in February. Analysts weigh in:

There’s nothing for the [People’s Bank of China] to worry about…It looks like the CPI number was mostly [due to a rise in] food. Some give back was likely given to the fall in February. The 0.2% month-on-month [rise] is very low….[The government] raised fuel prices in March, which I took as an indication that they were comfortable with the inflation outlook. An oil price spike is not in the cards. If we find ourselves in one of those, things will change, but today that doesn’t seem to be the way the world is working. – Tim Condon, ING

With headline CPI remaining below Beijing’s annual target of 4%, the rebound in March headline CPI, mainly led by a spike in food prices, is still moderate and manageable. Supply shock due to extreme weather conditions in specific food products such as spring onion and cabbage (prices up 50% year-on-year) could be one-off as we already saw decreases in prices running into April. Vegetable prices are on track for a decline as seasonal supply increases. That said, the first negative reading of PPI data since November-2009 reminds us that the inflation is still on track to ease further, and therefore is unlikely to become the major policy concern in the near term. – Qu Hongbin, HSBC

We expected March CPI to come back from 3.2 in February. Food inflation domestically drove the CPI up in March. It’s also probably due to the oil price reform that happened last month. The sticky CPI pressure, in terms of the implications on monetary policy, supports our view that there will be no rate cut this year, so monetary policy will rely on quantitative measures, like increasing bank lending in March. – Haibin Zhu, J.P. Morgan Chase

Food inflation has been benign so far in the year, with pork inflation continuing to fall and vegetable inflation expected to be transitory. However, producer price increases since the beginning of the year would feed through to consumer prices. In addition, we may see an indirect an impact from the March fuel price hike in the next few months, and recent media reports about grocery price hikes appear to prove that…While the rebound in CPI inflation may add to caution, inflation is expected to stay below 4% this year and should not be the main hindrance to policy easing. [The first quarter] GDP growth number available on April 13 would be the determining factor for policy actions. – Shuang Ding, Minggao Shen and Serena Wang, Citigroup

Since most investors and media will interpret the 3.6% reading as “acceleration” in inflation and some high-profile prices are being increased (like edible oil), today’s inflation data could be negative to markets. On policies, there is still room for hiking prices of fuel, power and other utilities in coming months. However, the room for doing so will be increasingly small. Policy fine-tuning could be continued, but as we argued before, there is no need to engineer a massive stimulus because we believe the current growth pace is appropriate for China (a faster pace of growth will be much more inflationary) – Ting Lu, Bank of America-Merrill Lynch

– compiled by Josh Chin and Paul Mozur

Interested in China’s inflation history? CRT’ China Econtracker has CPI and PPI data going back 10 years.