China’s consumer prices rose in March, official data showed Friday, while factory gate prices returned to positive territory for the first time in more than three years, stoked by soaring oil prices due to the Middle East war.
Leaders in the world’s second-largest economy have vowed to make domestic consumption a main driver of growth, shifting away from traditional drivers such as exports and manufacturing.
But results have been lackluster, with consumers unwilling to spend as the economy lags.
The consumer price index, a key measure of inflation, came in at 1.0 percent in March, according to the National Bureau of Statistics (NBS), falling slightly below the 1.1 percent increase forecast in a Bloomberg survey.
It is still well below the government’s two percent target for the year.
It edged lower from the 1.3 percent recorded in February, which had marked the biggest year-on-year jump since January 2023, spurred by a spike in travel and shopping surge during the Lunar New Year holiday.
NBS data on Friday also showed that prices at the factory gate — which had been stuck in negative territory since October 2022 — showed signs of recovery.
The producer price index increased by 0.5 percent year-on-year, reversing a drop of 0.9 percent in February, which marked the slowest pace of deflation since July 2024.
In March, following the Spring Festival holiday, consumer demand “seasonally” declined, NBS statistician Dong Lijuan said in a statement.
But the rise in gasoline prices bolstered consumer prices, Dong added.
Oil prices have skyrocketed due to the Middle East war, with Israel’s bombing campaign in Lebanon rattling a fragile US-Iran ceasefire and Tehran saying it will slap a toll on ships transiting the Strait of Hormuz.
The strait is a vital shipping route for global supplies of crude and gas, with China relying heavily on the region for its oil needs.
“The situation in the Middle East remains highly uncertain, so is the inflation outlook for many countries including China,” Zhiwei Zhang of Pinpoint Asset Management wrote in a note.
“I expect Beijing to keep policy stance unchanged at this stage and wait for clarity in external environment,” he said.
Producer prices ended more than three years of deflation due to “factors such as rapidly rising international commodity prices and improved supply and demand in some domestic industries”, Dong added.
