China’s consumer inflation rose to 3.6 percent in March from the same month last year, according to official data released Monday, driven by higher prices for fuel and food set by the state, which has shifted focus from keeping prices in check to boosting the slowing economy.
The March inflation rise compares with a smaller increase of 3.2 percent in February, the National Bureau of Statistics reported.
Food prices last month shot up 7.5 percent, the bureau said.
But analysts cited by the Wall Street Journal said their attention will be on official data, due out Friday, for Chinese gross domestic product during the first quarter. Those numbers, more than the inflation data issued Monday, will indicate whether and to what degree the central bank may need to tweak its monetary policy to combat the effects of the global economic slowdown on China's exports.
The inflation figure is not an obstacle to the central bank for possibly loosening its policy, Ding Shuang, an economist at Citigroup, told the Journal. But we need to see the GDP data to say when - and whether - the central bank eases monetary policy.
Aside from falling below the government's inflation target of 4 percent for 2012, the March number also was smaller than a 3.3 percent consensus estimate from 15 economists surveyed by Dow Jones Newswires.
There's nothing for the People's Bank of China to worry about, ING economist Tim Condon was quoted as saying. There was some bounce back (in prices). It looks like the CPI number was mostly (due to a rise) in food.
In a speech to the National People's Congress last month, Premier Wen Jiabao said China's consumer price inflation target for the year would be around 4 percent. The government had reported that for 2012, its aim would be to promote steady, robust economic development, keep prices stable, and guard against financial risks by keeping money and credit supplies at appropriate levels and being cautious and flexible.
Wen had said the government would work to prevent a rebound in prices this year. The continuing debt crisis in Europe and a soft U.S. recovery have hurt China's crucial export sector. The International Monetary Fund has warned that a worsening of the European crisis could cut China's economic growth by half this year.
The government has loosened credit conditions to encourage exporters. In recent months the state has twice cut the percentage of cash reserves it requires banks to hold, in a bid to spur lending to small businesses.
China is targeting economic growth of 7.5 percent in 2012, a decrease from recent years.
The deputy director of the National Development and Reform Commission, Zhang Xiaoqiang, said last week that the economy may have expanded about 8.4 percent in the first quarter. The growth rate in the fourth quarter was 8.9 percent.