Chinas consumer prices gain for 2nd month, factory deflation persists

China's consumer prices in March rose for a second straight month while producer price deflation persisted, pointing to still weak demand despite signs that the struggling economy is regaining some momentum.

Worrying deflationary pressures in the world's second-largest economy appear to be slowly easing, though demand remains soft and a protracted property crisis is still weighing heavily on consumer and business confidence.

Persistent declines in factory-gate prices and export prices, meanwhile, have added to tensions with China's biggest trading partners.

The consumer price index (CPI) grew 0.1 per cent in March from a year earlier, against a 0.7 per cent rise in February, which was the first gain in six months, data from the National Bureau of Statistics (NBS) showed on Thursday. That compared with a 0.4 per cent increase predicted by economists in a Reuters poll.

The CPI fell 1.0 per cent month-on-month, cooling from a 1 per cent gain in February and worse than a 0.5 per cent drop forecast by economists.

The producer price index (PPI) fell 2.8 per cent in March from a year earlier, widening a 2.7 per cent slide the previous month, and compared with a forecast 2.8 per cent fall. Factory-gate prices have been falling for a year and a half as companies cut selling prices to maintain sales and as commodity prices fell.

On a month-on-month basis, the PPI fell 0.1 per cent.

In recent months China has rolled out a raft of incentives to spur household spending including easier car loan rules, but consumers remain cautious about big-ticket purchases amid worries about the sputtering economy and the weak job market.

Earlier this month, China's central bank vowed to strengthen efforts to expand domestic demand and boost confidence.

Core inflation, excluding volatile food and energy prices, in March was at 0.6 per cent from a year earlier, slower than 1.2 per cent in February.