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May 10, 2019

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April inflation at 6-month high, PPI beats forecast

China’s consumer inflation continued to quicken last month to hit a six-month high, while factory-gate inflation also increased at a faster pace.

The Consumer Price Index, a main gauge of inflation, grew 2.5 percent in April from a year earlier, 0.2 percentage points faster than the previous month, to be the highest since October, the National Bureau of Statistics said yesterday.

On a month-on-month basis, the headline CPI rose 0.1 percent last month, compared with a 0.4 percent decline in March.

Among them, pork price extended the rebound by 1.6 percent mainly due to African swine fever, according to the statistics bureau.

Food prices jumped 6.1 percent year on year in April, contributing to a 1.19-percentage-point rise in the overall CPI growth.

The pace of increase was also faster than the 4.1 percent recorded in March.

The price of vegetables and fruits remained high, surging by 17.4 percent and 11.9 percent year on year, respectively, contributing to the growth of 0.43 percentage points and 0.22 percentage points in the headline CPI.

The higher fruit prices were mainly due to the poor harvest in the northern area last autumn and the shortage of inventories this year, according to the bureau’s Dong Yaxiu.

Pork prices soared by 14.4 percent year on year in April, 9.3 percentage points faster than the March figure and reversing the 4.8 percent decline in February, leading to a 0.31-percentage-point increase in overall CPI growth.

“We believe the rapid spread of African swine fever since August 2018 could help push up pork prices by another 40 percent over the next six months,” said Lu Ting, chief China economist of Nomura.

Non-food prices, meanwhile, also rose by 1.7 percent year on year, slightly slower than the 1.8 percent growth in March.

The price of health care, education, culture and recreation, and residence advanced 2.6 percent, 2.5 percent and 2 percent, respectively.

Together they contributed to a 0.22-percentage-point increase in overall CPI growth.

The Producer Price Index, which measures costs of goods at the factory gate, rose by a stronger-than-expected 0.3 percent year on year in April, 0.2 percentage points faster than the previous month, mainly due to a low base and more expensive oil prices, according to Nomura.

In month-on-month terms, PPI inflation also went up to 0.3 percent from 0.1 percent in March, much higher than the 0.2 percent decline in April last year.

Among upstream sectors, PPI inflation in the mining sector increased to 5.3 percent year on year in April from 4.2 percent in March, while in the processing sector, it rose to 0.9 percent from 0.4 percent.


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