MNI DATA ANALYSIS: China's Inflation Unlikely to Alter Policy

--Pork Price Rebound Leads to Higher Food Cost

--No Impact on Monetary Policy: Economists

--PPI Rises on Higher Material Prices

     BEIJING (MNI) - China's consumer price index rose to a five-month high

while producer price index gained for the first time in nine months, government

data released on Thursday show. The upticks are not likely to prompt

decisionmakers to change the current monetary policy, some economists said.

     Inflation rose 2.3% y/y in March, up from 1.5% in February, below 2.5%

projected by economists polled by MNI, while PPI rose from the lowest in more

than two years to 0.4% y/y, meeting forecast in an MNI survey.

     March food price rose 4.1% y/y, dragging up the CPI by 0.82 percentage

point, the NBS said. In particular, the price of pork gained for the first time

in more than two years, gaining 5.1% from -4.8% y/y in February due to supply

disruptions caused by African swine flu, the NBS said.

     The moderate inflation was mainly driven by the rebounding pork prices

rather than a general rise in prices, Li Chao, an analyst at Huatai Securities

wrote in a report. No other risks except pork fuel inflation in the short term,

Li added.

     --STABLE CORE CPI

     Core CPI, excluding food and energy prices, remained stable at 1.8%,

Capital Economics said in a note sent to MNI. 

     The increasing pork prices will continue to push up the CPI by 2 to 2.5

percentage points, Guotai Junan Securities said in a report, noting that Q4

inflation could hit the government's 3% ceiling set for 2019.

     The central bank is expected to be more tolerant with inflation, allowing

it to rise as high as 3.5%, as a stable core inflation indicates the economy is

not overheating and moderate inflation helps stabilize leverage ratio, Guotai

Junan said.

     Monetary policy is likely to remain the same, as further relaxing requires

a lower-than-expected inflation, or a renewed downward pressure on the economy,

and there are no signs suggesting a tightening bias, Deng Haiqing, chief

economist at Wallstreet CN, said in a report. 

     --PPI GAINS

     PPI registered a first monthly gain in nine, rising 0.1% from February. The

pickup was due to a rise in the cost of raw materials, especially oil, said

Deng. The price of production materials rose 0.2% m/m. The government's

infrastructure stimulus also strengthened producer prices, Guotai Junan said.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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