China’s inflation rate edges up in March
China’s inflation rate rose slightly in March, raising concerns about the government’s ability to stimulate the economy should growth falter in coming months.
Rising food and fuel prices helped drive China’s consumer price index up 3.6% from the same month last year, China’s National Bureau of Statistics said Monday. That was up from a 3.2% rate in February.
China raised its retail prices for gasoline and diesel March 20 for the second time in six weeks, increases that probably contributed to the rising food costs.
Food prices grew 7.5% in March, driven largely by a jump in the cost of vegetables, which were damaged by poor weather. China National Radio reported one restaurant declining to serve kung pao chicken because green onions, a key ingredient, were too expensive.
Although the increase in inflation came in higher than many analysts expected, it remained lower than China’s annual target of 4% and well below July’s three-year high of 6.5%.
The world’s second-largest economy is projected to show annualized growth of 8.4% in the first quarter, which would mark its slowest expansion in nearly three years.
But so far, policymakers have resisted aggressive moves to ease credit or lower interest rates because of fears of fueling inflation. In February, the central bank lowered reserve requirements for the nation’s lenders to boost liquidity in the economy, but that may not be enough to keep growth from slowing further.
“The main risk now to the government’s cautious monetary stance is that the modest cuts in reserve requirements so far are not enough to allow banks to meet their lending targets,” said analysts at GaveKal Dragonomics, a China economic research firm, in a note to clients Monday.
