China’s consumer price index sees slowest growth in two years

China’s consumer prices experienced a slow increase over the past two years in April, with factory gate deflation becoming more pronounced, according to recent data. This outcome has prompted conjecture that additional stimulus activities may be necessary to enhance the uneven post-pandemic economic recovery. In April, the consumer price index (CPI) increased by 0.1% year-on-year, making it the lowest level since February 2021 and a reduction from the 0.7% annual increase in March, as reported by the National Bureau of Statistics (NBS). This result did not reach the expected 0.4% increase predicted in a Reuters poll.

Producer deflation also experienced a significant decline, highlighting difficulties faced by factories and the wider economy as efforts to revitalize China’s market intensify following the easing of coronavirus restrictions in December. The producer price index (PPI) fell at its quickest pace since May 2020, marking a seventh consecutive month of decreases, and declined 3.6% from the previous year after a 2.5% drop the month before. Projections had anticipated a 3.2% decline.

Although China’s economy expanded at a rate exceeding expectations during the first quarter thanks to the easing of COVID-19 restrictions in December, recovery has been inconsistent. Recent findings have shown that factory activity contracted and imports decreased in April. Services inflation likely experienced an upward trend upon reopening, but this was largely counterbalanced by reduced growth rates in food and energy prices.

When comparing month-on-month statistics, the PPI experienced a 0.5% decrease after remaining flat the previous month, and the CPI faced a 0.1% drop in April compared to a 0.3% decrease in March. These numbers exceeded the flat reading predicted in a Reuters survey. Overall, inflationary pressures stayed low, with core consumer inflation – excluding unpredictable food and energy prices – maintaining a 0.7% increase, which remains unchanged from the previous month, reports Channel News Asia.