The year-on-year increase of China's CPI in March rebounded to 1.5% from 0.9% in February, slightly higher than the 1.4% expected by the market. The rebound in CPI in March was mainly due to the sharp rise in energy prices caused by the conflict between Russia and Ukraine
The year-on-year increase of PPI in March further fell to 8.3% from 8.8% in February, but it was higher than the 8.1% increase expected by the market. The year-on-year increase of PPI fell in March, mainly due to the high base effect in the same period last year. On a monthly basis, PPI rose 1.1% month on month in March, while it rose 0.5% in February. PPI rose month on month, mainly due to the obvious rise in international commodity prices, including energy, reflecting the increased inflationary pressure on PPI imports
On the whole, although the March data show that the current inflation pressure is still relatively mild, the rise in international commodity prices has great pressure on China's imported inflation. However, CPI inflation, which is more valued by the people's Bank of China, remains weak. Excluding volatile food and energy prices, the core CPI inflation increased by only 1.1% year-on-year in March and decreased by 0.1% month on month, indicating that consumption is weaker than production. The recent outbreak of covid-19 epidemic has weakened the overall domestic demand. The data also shows that the transmission pressure from PPI inflation to CPI is still limited, and moderate CPI inflation is not expected to disturb monetary policy. At present, the focus of macro policy is still steady growth. We expect the people's Bank of China to announce interest rate or reserve requirement reduction in the second quarter to support the operation of the real economy
The year-on-year increase of China's CPI in March rebounded to 1.5% from 0.9% in February, slightly higher than the 1.4% expected by the market. Overall food prices fell by 1.5% in March, narrowed compared with the 3.9% decline in February, affecting the CPI decline by about 0.28 percentage points. Food prices rose slightly from 77.2% in the same period to about 1.2% in the same period. On a monthly basis, CPI was flat in March, while it rose by 0.6% in February. CPI rose by an average of 1.1% in the first three months of 2022.
