According to data released today by the National Bureau of Statistics on the nationwide Consumer Price Index (CPI) and the Producer Price Index (PPI) for March 2016, the CPI fell by 0.4% month-on-month but rose by 2.3% year-on-year; the PPI rose by 0.5% month-on-month but fell by 4.3% year-on-year. Yu Qiumei, a senior statistician with the Urban Division of the National Bureau of Statistics, provided an interpretation of these figures.

I. Resident consumer prices declined month-on-month, while the year-on-year increase remained the same as the previous month.

On a month-on-month basis, the CPI in March fell by 0.4%, mainly due to declines in prices of fresh and live food products and certain service items. First, after the Spring Festival, prices of fresh and live food products declined somewhat. Specifically, egg prices fell by 7.4%, fresh vegetable prices by 5.5%, aquatic product prices by 2.8%, fresh fruit prices by 2.0%, and pork prices by 1.3% month-on-month, collectively lowering the CPI by about 0.38 percentage points. Second, as the impact of the Spring Festival holiday faded, airfare and travel agency fees dropped by 8.2% and 5.5% respectively, collectively pulling down the CPI by roughly 0.11 percentage points. Third, as migrant workers gradually returned to cities, prices of some services that had risen during the Spring Festival began to fall. Prices for vehicle repair and maintenance, hairdressing, and domestic services fell by 5.8%, 4.4%, and 3.3% month-on-month, respectively, collectively reducing the CPI by about 0.04 percentage points.

Compared with the same period last year, the CPI growth rate in March was the same as that of the previous month, though some sub-categories showed relatively higher growth rates. Earlier, a nationwide cold wave and low temperatures had affected the growth of fresh vegetables, resulting in a relatively tight market supply compared to March of last year. As a result, fresh vegetable prices rose significantly year-on-year, with an increase of 35.8%, contributing about 0.92 percentage points to the overall CPI rise. Moreover, due to the prolonged slump in pork prices earlier, pig farmers’ enthusiasm was dampened, leading to a decline in the live pig inventory and placing pig production capacity at a recent low. Consequently, market supply remained tight, causing pork prices to rise by 28.4% year-on-year, which in turn contributed about 0.64 percentage points to the CPI increase.

II. The month-on-month change in ex-factory prices of industrial producers turned from decline to increase, and the year-on-year decline continued to narrow.

In March, the national ex-factory prices of industrial producers turned from decline to rise month-on-month, increasing by 0.5% compared to the previous month—a first increase since January 2014. This month’s month-on-month changes exhibited the following characteristics: First, price increases widened in some industrial sectors; among them, the prices of ferrous metal smelting and rolling processing, as well as non-ferrous metal smelting and rolling processing, rose by 4.9% and 2.3% respectively month-on-month, with growth rates expanding by 4.4 and 2.2 percentage points, respectively, compared to the previous month. Second, prices in some industrial sectors stopped falling and began to rebound; specifically, the prices of oil and natural gas extraction, ferrous metal mining and beneficiation, and chemical raw materials and chemical product manufacturing turned from declines last month to rises this month, increasing by 9.9%, 3.6%, and 0.9% respectively month-on-month. Third, the price of petroleum processing fell by 0.2% month-on-month, with the decline narrowing by 3.7 percentage points compared to the previous month.

In March, the ex-factory prices of industrial producers fell by 4.3% year-on-year, a narrower decline than the previous month by 0.6 percentage points. By industry sector, the ex-factory prices of crude oil and natural gas extraction, petroleum processing, coal mining and washing, ferrous metal smelting and rolling, nonferrous metal smelting and rolling, and chemical raw materials and chemical product manufacturing declined by 33.8%, 18.0%, 16.6%, 10.9%, 8.3%, and 5.5% year-on-year, respectively. Together, these sectors accounted for approximately 2.8 percentage points of the overall year-on-year decline in the ex-factory price index for industrial producers in the month, representing about 65% of the total decline.