China inflation grows at slowest rate in over two years
China’s inflation rate edged up 0.1 percent year-on-year in April, the slowest rate recorded since 2021, official figures showed Thursday, signalling a weak recovery after lifting pandemic curbs.
Producer prices fell for the seventh consecutive month due to sluggish domestic demand and lower commodity costs, data released by Beijing’s National Bureau of Statistics (NBS) showed.
April’s consumer price index (CPI), the main gauge of inflation, was the lowest level recorded since February 2021 and fell below the 0.3 percent increase forecast by analysts polled by Bloomberg.
In March, China’s CPI was 0.7 percent.
Food prices — a major component of the inflation basket — increased by only 0.4 percent in April, compared to the previous year.
April’s figure was also affected by last year’s high base for comparison, Dong Lijuan, an NBS analyst said in a statement.
Food prices were high in April 2022, as Covid lockdowns in several major cities including Shanghai squeezed supply.
“The subdued inflation readings suggest post-Covid recovery momentum continued to weaken in April,” Ting Lu, chief China economist at Nomura said.
“Looking ahead, given still softening food prices… subdued fuel prices, the elevated unemployment rate… we expect CPI inflation to remain fairly soft in May,” he added.
China’s inflation figures were in stark contrast to the latest data in the US, where consumer prices rose by 4.9 percent in April as the Federal Reserve attempted to tame escalating prices by hiking rates 10 consecutive times.
China’s service prices rose one percent in April compared to the previous year and up from the 0.8 percent recorded in March, according to NBS data, as consumers spent more on travel and other leisure services.
“The economic recovery seems unbalanced at this stage, with the service sector normalizing… while the manufacturing sector (remains) muted,” Zhiwei Zhang of Pinpoint Asset Management wrote in a note.
China’s producer price index, which measures prices paid by wholesalers, fell 3.6 percent in April compared to the previous year.
The decline was due to the fall in the global price of raw materials such as iron ore and crude oil.
China has set a growth target of around five percent this year, the lowest goal in decades, with premier Li Qiang warning it “will be no easy task”.