China's consumer prices continued to grow at their highest level since July 2014 last month while factory gate prices rose for the first time in 27 months, easing concerns over the economic slowdown.
The Consumer Price Index, the main gauge of inflation, grew 2.3 percent from a year earlier in March, the same as February, the National Bureau of Statistics said yesterday.
Food prices, accounting for nearly a third of the CPI basket, rose 7.6 percent, compared to February's 7.3 percent and January's 4.1 percent.
Prices in the non-food sector rose 1 percent, the same as February.
Yu Qiumei, a bureau researcher, said shortages of vegetables and pork helped sustain inflation, with fresh vegetables up 35.8 percent year on year last month, the fastest rise in nearly eight years partly due to bad weather in February. Pork prices were up by 28.4 percent.
The Producer Price Index, a measurement of inflation at the factory gate and an indication of future prices at the consumer end, rose 0.5 percent month on month, the first rise since January 2014.
On a year-on-year basis, however, it fell 4.3 percent, the 49th consecutive month of decline, although narrowing from February's 4.9 percent and 5.3 percent in January.
Liu Ligang, chief China economist at Australia & New Zealand Banking Group Ltd, said: "Deflation is our top macroeconomic concern and today's PPI offers signs of relief. Recent surging housing prices may become a pull factor on the price front, and if the recovery persists for a few more months, commodity prices will likely be stabilized."
He said the figures suggested that the People's Bank of China will be less aggressive in monetary easing, and ANZ now expects just one cut in banks' reserve requirements this year rather than three.
HSBC economists Julia Wang and Li Jing wrote in a note that food price inflation is expected to ease in the second quarter, leaving the full year CPI "comfortably" below the 3 percent official target.
That will allow the government to adopt easy monetary policies and an expansionary fiscal policy to counter economic slowdown factors such as lower capacity and soft external demand, the note said.
China has been watching for deflationary pressures over the past year due to slowing economic growth and continued falls in producer prices.
In last year's final quarter, its gross domestic product grew 6.8 percent, giving 2015 a growth rate of 6.9 percent, the slowest annual expansion in a quarter of a century.
This year, the official target is between 6.5 percent and 7 percent.
The World Bank said yesterday it expected China's growth to be slower and more sustainable, with a 6.7 percent GDP increase this year.
