China’s consumer price index (CPI) crept up 1.5 percent year-on-year, exceeding the forecast 1.2 percent, as compared to 0.9 percent in February, data from the National Bureau of Statistics showed yesterday. While the producer price index (PPI) also increased 8.3 percent in March from a year ago, beating a forecast for a 7.9 percent rise.
The factory-gate and consumer prices rose faster than expected in March, while new lending exceeded forecasts showing the government’s support for the economy.
The main factors of the rises in both CPI and PPI were due to Russia’s invasion of Ukraine, persistent supply chain bottlenecks, and production snags caused by local Covid flare-ups added to commodity cost pressures.
The surge in raw materials costs is crippling global economies. In China, questions about how much its central bank will be able to ease monetary policy are raised.
“Rising food and energy price inflation limits the space for the central bank to cut interest rates, despite the rapidly worsening economy,” global financial services group Nomura was quoted as saying in a note.
On the credit side of the equation, China’s credit expanded faster than expected in March as local governments and companies accelerated borrowing, even though mortgage growth remains weak due to worries about the property sector slump. Banks lent RMB3.1 trillion in the month, up from RMB1.2 trillion in February and exceeding the consensus estimate of RMB2.8 trillion, according to data released by the People’s Bank of China yesterday.
Aggregate financing, a broad measure of credit to the real economy, reached RMB4.7 trillion, beating the RMB3.6 trillion projected by economists.
Credit growth had picked up as companies resumed operations following the Chinese Spring Festival holidays in February, resulting in a rebound in corporate borrowing.
