Chinese Inflation is Falling, Depressed by the Lockdown

Inflation in China was lower in March than in February, due to weak demand caused by the lockdown against the new coronavirus.

 

Inflation was 4.3 percent year-on-year, from 5.2 percent in February. That is the lowest level since October. Economists had generally expected a more substantial price increase.

Demand for goods remained weak despite the easing of government restrictions against the lung virus.

As a result, factories were paid lower prices for their products. Also, prices for foodstuffs such as pork, vegetables and fruit rose less rapidly.

Furthermore, the sharp fall in oil prices depressed inflation.

Chinese core inflation, which does not take food and energy prices into account, rose slightly to 1.2 percent in March. In February this was still 1 percent. That is still a reasonably low level.