Keeping inflation down top priority in China’s monetary policy

China’s consumer price index(CPI), which is a main measure of inflation, increased 2.4 percent in March, up from 2 percent in the previous month. The acceleration in inflation was attributed to growth of food prices. Food prices gained 4.1 percent and contributed 1.35 percentage points to the month’s CPI growth, according to figures from the National Bureau of Statistics. According to the bureau, the producer price index(PPI), which is a gauge of inflation at wholesale level, contracted 2.3 percent in March, declining 2 percent from the previous month. The CPI and PPI data of March are mostly in line with market expectations. With an increase at 2.4 percent, the figure remained below the target set by the government at 3.5 percent. Zhou Xiaochuan, governor of the central PBOC, said at the Boao annual conference held not long ago that keeping inflation down is the top priority in monetary policy. China will adjust the weighting of various monetary policy targets according to market situations, he added. Zhang Zhiwei, Chief China economist with Japan’s Nomura securities, held there is still room for more policy easing in the second quarter of this year. Zhang said: "We expect growth to slow in the second quarter partly due to weak momentum in the property sector, and the government will likely have to ease policies further, particularly on the monetary side.”