China April Producer Prices Rise 6.4 Pct, Consumer Prices Up 1.2 Pct
April consumer inflation rose by 1.2%, slightly above estimates from economists polled by the Wall Street Journal. But after the seasonal adjustment, the trend data imply that underlying inflation pressure stays quite weak, implying that the economy is not on a strong footing yet, noted Commerzbank in a research report.
The producer price index (PPI), which measures costs of goods at the factory gate, rose 6.4 percent year on year in April, down from 7.6 percent in March and missing expectations of 6.7 percent. On a sequential basis, the PPI inflation slowed to 0.4 percent, demonstrating the weakening momentum.
The rise was mainly caused by a pickup in travel and consumption activities during the Tomb Sweeping Day holiday in early April and before the May 1 International Labor Day holiday, said Sheng from the NBS.
Price declines widened in major industries in April, with factory-gate prices in the oil and gas extraction industry down 4.2 per cent from a month earlier, noted NBS senior statistician Sheng Guoqing. "We don't think PPI or CPI will have any significant impact on the current policy direction", said Wang.
CPI increased 1.4 percent in the first four months of the year.
Concern over the regulatory squeeze has weighed on the stock markets, with the benchmark Shanghai Composite Index shedding more than 6 percent during the past month.
Julian Evans-Pritchard, China economist at Capital Economics, said: "Consumer price inflation. may inch up further, but should remain below two per cent". On a month-on-month basis, the index dropped 0.4 percent, the first fall since July 2016.
Factory gate prices had only turned positive on a year-on-year basis last September, after falling for almost five years, leaving many industrial firms saddled with idle capacity and less cash flow to service their debts.
Food prices, the biggest component of the consumer price index (CPI), fell 3.5 per cent.
China's annual inflation is to average 2.1 per cent in 2017 and 2.3 per cent in 2018, according to a Reuters poll of over 75 economists.
Chinese President Xi Jinping called last month for increased efforts to ward off systemic risks to help maintain financial security, the official Xinhua news agency reported.