China's consumer inflation held steady in March, but wholesale prices remained entrenched in deflation, signalling a favorable environment for further government stimulus.
The consumer price index (CPI) rose 1.4 percent on year, above expectations of a 1.3 percent rise predicted in a Reuters poll and following a 1.4 percent rise in February.
Wholesale prices, or the producer price index (PPI), fell 4.6 percent in March, better than the average forecast of a 4.8 percent decline, and after dropping 4.8 percent in February.
"In the last several months, disinflation has been a major concern. Today's data is good news in that the CPI is staying stable, but our expectations is the CPI will continue to move downwards in the next 2-3 months," Zhu Haibin, chief China economist and head of greater China economic research at J.P Morgan told CNBC.
"In terms of policy response, we still expect further easing," he said.