China's inflation eases to 2.1% in March

Tuesday 09 April 2013 12.03
Chinese consumer prices rose by 2.1% in March, down from rise of 3.2% in February
Chinese consumer prices rose by 2.1% in March, down from rise of 3.2% in February

China's inflation declined in March, easing pressure on consumers but fueling questions about the strength of recovery in the world's second-biggest economy.

Chinese government data today showed consumer prices rose 2.1%, down from the previous month's 3.2% and well below the official target of 3.5% for the year. Wholesale prices declined by 1.9% compared with last year.

Mixed economic data show the world's second-largest economy is limping out of its deepest slump since the 2008 global crisis but more slowly than Chinese leaders want.

Analysts say the rebound could be vulnerable to a downturn in investment or trade.

Economic growth rose to 7.9% in the three months to the end of December, up from the previous quarter's 7.4%. Analysts say the recovery is being propped up by government spending and bank lending, while consumer spending is growing slowly.

Figures early in the year often are distorted by the Lunar New Year holiday. Inflation fell to 2% in January, then spiked to a 10-month high in February as vegetable costs rose due to cold weather and families stocked up on gifts and food for banquets.

The government's growth target for the year is 7.5%, above Western levels but well below China's double-digit rates of the past decade.

Chinese leaders say they want to nurture more self-sustaining growth driven by domestic consumer spending and reduce reliance on exports and investment.

Manufacturing accelerated in March but was weak, according to the China Federation of Logistics and Purchasing, an industry group. Its purchasing managers index rose to 50.9 from February's 50.1 on a 100-point scale on which numbers above 50 indicate an expansion.