BEIJING, April 4 -- Analysts forecast that China's consumer price index (CPI), a main gauge of inflation, will grow mildly in March, as food prices have continued to fall after the February holiday.
Previous official data showed that China's CPI rose 3.2 percent year on year in February, the highest level in 10 months and a sharp jump from the 2-percent increase seen in January.
The rebounding trend, however, is not likely to continue in March, as food prices, which account for nearly one-third of the weighting in China's CPI, have continued to drop since the Spring Festival holiday ended, analysts said.
Due to waning post-holiday demand and rising vegetable supplies amid warming weather, edible farm produce prices in 36 major Chinese cities have fallen for six consecutive weeks, according to the latest data from the Ministry of Commerce.
Overall food prices in March may decline sharply compared with February, and demand for non-food products will also fall, said Tang Jianwei, a macro-economic analyst with the center for financial research of the Bank of Communications.
Tang forecast that March's CPI will rise about 2.5 percent year on year.
Pan Xiangdong, chief economist with Galaxy Securities, agreed that inflation will be mainly held back by falling food prices. He said he expects the March CPI to rise by about 2.6 percent.
After the first quarter, farm produce prices will be less volatile, Pan added.
After April, the year-on-year rise of the CPI may increase mildly, but consumer inflation will be controllable, overall, during the year, given that a modest rebound is expected for China's economy and the monetary policy remains prudent, Tang said.
On the other hand, China's producer price index (PPI), which measures inflation at the wholesale level, may continue to fall on a yearly basis for the coming several months, due to stubborn prices of international commodities and a slow recovery in industrial production. This will leave limited room for inflation to climb further during the year, analysts said.
China's March CPI and PPI are scheduled to be released on April 9.