Weak inflation in China

China’s consumer inflation slowed in March despite a recovery in economic activity, while producer prices narrowed further, leaving the central bank with room to ease monetary policy as needed to aid the recovery. The National Bureau of Statistics expected a 1% increase in the consumer price index from a year earlier, but came in lower than expected at 0.7%. Bloomberg economists had expected the index to remain steady. Producer prices fell 2.5% on the year after economists expected a 1.4% decline. Core inflation, which excludes more volatile food and energy prices, rose to 0.7% from 0.6%. “The economic recovery is on track, but it is not strong enough to push up prices. This suggests the economy is still performing below its potential. There is room for fiscal and monetary policies to further boost growth,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.