China Inflation Rises to 2.4 Percent

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 percent compared with a year earlier, up from February’s 2 percent rise, government data showed Friday. The increase was driven by a 4.1 percent rise in politically sensitive food costs.

Producer prices, measured as goods leave the factory, fell by 2.3 percent 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 percent, leaving Beijing room to stimulate the slowing economy with interest rate cuts or other measures if necessary.

China’s imports shrank 11.3 percent 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 percent 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.

via Mainichi

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