China 's inflation fell sharply in March to below 1%, a sign of weak demand as the world's second-largest economy tries to recover from the recession caused by the pandemic.

The National Bureau of Statistics said in its official figures that the consumer price index, which is the main measure of inflation, was 0.7 percent, compared to 1 percent in the previous month.

Beijing has set a target for average consumer price inflation in 2023 of 3 percent.

Analysts had expected inflation to pick up in March, as economic activity picked up after the waiver of strict COVID-related restrictions at the end of 2022.

The producer price index, which measures the cost of goods leaving the factory, shrank for the sixth month in a row, with prices falling 2.5 percent.

"The economic recovery is on the right track, but it is not strong enough to raise prices," said economist Jeffy Zhang of the "Penpoint Asset Manager" group.

"This is an indication that the economy is still operating below its potential," he added.

China was relatively unaffected by the sharp rise in world prices for raw materials and food and the consequences of the Russian invasion of Ukraine.

However, the Chinese economy was greatly affected in 2022 by the isolation measures and movement restrictions imposed within the framework of the strict "zero Covid" health policy that finally ended in early December.

Activity and consumption will gradually resume.

"We believe that consumer price inflation will rebound in the coming months," financial advisory firm Capital Economics said in a note.

Analysts pointed out that "it will be well below the ceiling set by the government by about 3 percent, and the increase in inflation will be much less than what has been seen elsewhere."

And the world's second largest economy recorded growth of only 3 percent in 2022, which is among the lowest in four decades.

China has set a target of 5 percent growth in 2023.