China’s consumer price rise slows in March, as policymakers struggle to jumpstart spending

China’s inflation rate slowed in March, official data showed Thursday, as policymakers struggle to jumpstart persistently low spending in the world’s second-largest economy.

The consumer price index (CPI) last month edged up by 0.1 percent year-on-year, according to the National Bureau of Statistics (NBS), below the 0.4 percent gain forecast by a Bloomberg poll of analysts.

“In March, under the impact of factors such as the seasonal decline in consumer demand after the holidays and the overall sufficient market supply, the increase in the nationwide CPI… somewhat declined,” the NBS said.

The figure represented a slower rate of growth from 0.7 percent in February when consumer prices emphatically bucked a deflationary trend stretching back to August.

The slowdown “indicates that China still faces the risk of deflation, as domestic demand remains weak”, said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

“Fiscal spending has been weak so far this year. Export growth by itself cannot boost aggregate macro activities without help from more supportive fiscal policy,” he said.

China’s economy has shed its soaring growth rates of a decade ago and is now beset by multiple crises, with a debt-beleaguered property sector and high youth unemployment adding to the difficulty of getting consumers to open their wallets.

Beijing has set a target of five percent GDP growth this year but has acknowledged that achieving it will “not be easy”.

Producer price indices (PPI) continued to fall in March, down 2.8 percent year-on-year, the NBS said.

“As industrial production resumed after the holidays and the supply of industrial products was relatively sufficient, the national PPI… (showed) a slightly broader decline,” it said.

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