China released inflation data for March, and the numbers received mixed reviews. One set of analysts believes that a lack of price increases will give consumers and businesses more purchasing power. In other words, rapidly rising prices rob purchasing leverage from the economy. On the other hand, another set of experts argues that low inflation means a flat economy. Sharp improvements in gross domestic product always trigger demands for goods and services. Inflation, according to this position, is a yardstick for expansion.
Either way, China’s consumer purchasing index rose an extremely modest 2.1% last month.
According to a CNBC interview:
“The economic rebound China has experienced over the last few months should have brought about greater inflationary pressure. But, both CPI [consumer price index] and PPI [producer price index] readings for March point to subdued inflation. Indeed, that is another indicator that the recovery is not yet completely secured,” wrote Alistair Thornton, senior China economist at HIS, which provides economic and financial analysis.