China's consumer price index dropped from 3.2 percent in February to 2.4 in March, as a result of a post-Chinese New Year decline in food prices, in particular the lower cost of vegetables, pork and eggs, investment bank Barclays said in a research note on Monday.

"Non-food price inflation will also stay low, in our view, given a gradual recovery in domestic activity," said Chang Jian, an economist with Barclays.

Falling commodity prices and soft activity likely dragged the Producer Price Index lower, as it fell to -1.8 percent in March from -1.6 percent in February.

"On the demand side, we expect investment growth to rise modestly on the back of a likely jump in new loans, and retail sales to recover somewhat after the year-on-year slump during the Chinese New Year period. We expect export growth to return to more 'normal' levels after the upside surprises over January and February," said Chang.

The bank estimated that export growth dropped about 10 percent in March, down from 24 percent over January and February, consistent with the soft trade growth in the region and the continued decline in the export orders PMI, given the three-month leading relationship. Import growth will likely hover around the mid single-digit level, on slowly recovering domestic demand.

Starting this week, China will release March economic indicators. The inflation figure will be out on Tuesday and trade figures will be out on Wednesday. These will be followed by first quarter GDP and domestic activity data on the 15th.

"Overall, we maintain our forecasts for falling inflation and stabilizing GDP growth," Chang added.

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