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© Reuters. Chinese banknotes are seen in the case of a seller in a Beijing market
BEIJING (Reuters) – Inflation at the exit of the factory resumed for the first time in March in March, moving away from deflationary territory to show the government's efforts to revive the economy. economy could begin to revitalize domestic demand.
Consumer inflation has also accelerated, reaching its highest level since October 2018 due to soaring pork prices due to the growing epidemic of swine fever, official data revealed Thursday.
The rebound in output inflation, albeit mild, is likely to bolster optimism that the world's second-largest economy is starting to turn slowly, while recent surveys have shown that factory activity has increased for the first time. first time in months.
But badysts urge caution, saying it will take a few more months of data and more political support from Beijing to see if a recovery can be sustained.
China's producer price index (PPI) rose 0.4% in March over the previous year, according to badysts' forecasts in a Reuters poll. It rose from a 0.1% increase in February, the National Bureau of Statistics (NBS) said.
Most of the increase was in the mining sector as extraction prices rose 4.2% year-over-year, up from 1.8% in February. Declines in commodity prices also moderated.
But improvements could be due more to changes in commodity prices than to stronger demand. Prices for consumer durables fell for a second month, suggesting continuing weakness.
On a monthly basis, producer prices rose for the first time in five months. The index rose 0.1% after falling 0.1% in February.
The world 's second largest economy is growing at its weakest pace for nearly three decades, due to weaker domestic demand and a one – year trade war with the world. United States. Multi-year campaigns to reduce the risks of debt and pollution have deterred new investment.
In response, Beijing plans to increase spending on roads, railways and ports, which should increase demand and prices for building materials. Last month, the government announced additional tax cuts of nearly 2 trillion yuan ($ 297.27 billion) to ease corporate balance sheets.
The reduction of the Value Added Tax (VAT) that came into effect on April 1 has already led the authorities to reduce the prices of electricity and. Retail prices of gasoline and diesel must also be reduced.
A growing number of companies ranging from Apple Inc. (NASDAQ 🙂 to BMW have lowered the prices of their products following tax cuts.
FEVER SAVING THE PRICE OF PIG
The consumer price index (CPI) rose 2.3% in March over the previous year, a five-month high, mainly because of higher prices for pork, the spread African swine fever pushing farmers to get rid of their herds.
This represented an increase of more than 1.5% in February, but slightly below market expectations for a 2.4% increase.
Pork prices rose 5.1% in March from the previous year, the first increase after 25 months of decline.
On a monthly basis, the CPI rose 1.2%.
According to some badysts, pig production in China, which consumes about half of the world's pork production, is expected to fall by about 30% in 2019, pushing up meat prices.
Economists believe however that the central bank should not overreact to soaring food prices if it appeared temporary and that fundamental inflation, which eliminates the volatility of energy prices and foodstuffs, remains stable.
Inflation in non-food consumption increased by 1.8% in one year, just slightly more than in February.
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