Photo: Wikipedia Commons
Photo: Wikipedia Commons

Chinese consumer prices rose at a subdued pace for a second month in March, held back by cheap food, clothing and other manufactured goods. Ex-factory gate producer prices also receded after hitting an eight-year high in February.

China’s Consumer Price Index (CPI) grew 0.9% on-year, while the Producer Price Index (PPI) grew 7.6%, the National Bureau of Statistics said on Wednesday.

The inflation figures came in broadly in line with median estimations of 1% for CPI and 7.5% for PPI, according to economists polled by Bloomberg.

Liu Xuezhi, a senior researcher at the Bank of Communications’ Financial Research Center, told the China Securities Journal prior to the official report: “Declining food prices and smaller gains for travel and clothing-related items are believed to be the key reasons for the low CPI reading in March.”

For more top picks from today’s Chinese media go to our China Digest

When food is taken out of the equation, however, China’s inflation remains on a climb. Non-food CPI gained marginally to 2.3% in March, putting the first quarter reading also at 2.3%, or almost a whole percentage point higher than 2016’s full-year reading of 1.4%, led by significant jumps in the prices of services such as education and leisure, housing and healthcare.

Consumer inflation had slumped to 0.8% in February due to a sharp drop in food prices following the Lunar New Year celebrations. The number was substantially lower than the 2.5% growth in January. Beijing has targeted inflation of 3% for 2017.

Over on the producer level, the PPI increased 7.6% in March from a year earlier, dropping slightly from the 7.8% increase in February. However, input-side PPI edged higher to 10.0% from its previous record of 9.9%. The divergent development signifies that the issue of high input cost pressure is lingering, a net negative for margins especially for mid-to-downstream manufacturers.

Similar to previous months, gains in the PPI were most acute in various heavy industries, led by a 33.7% increase in the overall mining sector. The petroleum exploration, steelmaking, and non-ferrous metal smelting sectors saw selling prices rising 68.5%, 36.8%, and 17.3%, respectively.

On a month-on-month basis, the PPI rose just 0.3%, the slowest pace in eight months.