China’s consumer price inflation was higher than expected in March at 3.6%, up from a 3.2% annual increase in February, Bloomberg reported. The increase was driven mostly by food-related prices, which climbed 7.5% overall and 20.5% in the vegetable sub-component. While the figure was well below last year’s inflation levels, analysts say the slight rebound may cause Beijing to proceed cautiously with monetary easing. “The upside surprise in today’s [consumer price index] reading is likely to raise concerns about a possible rebound in inflationary pressures among policymakers,” said Song Yu, an economist with Goldman Sachs. However, “underlying inflationary pressures remain modest” and the consumer price index will likely taper off in coming months, Song said. Many economists expect Beijing to ease monetary conditions later this year – likely via further cuts to the amount of funds banks are required to store away – to offset a cooling economy.
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