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China’s consumer inflation picked up on services

By Feng Jianmin | 10:11 UTC+8 May 10, 2017 | Online Edition

CHINA'S consumer inflation accelerated in April to the fastest in three months while factory gate inflation cooled month-on-month for the first time since July last year, official data showed today.

The Consumer Price Index, a main gauge of inflation, rose 1.2 percent year on year in April, 0.3 percentage points higher than March, according to the National Bureau of Statistics.

The reading was generally in line with market consensus forecast for 1.1 percent.

Meanwhile, the Producer Price Index, which measures costs for goods at the factory gate, dipped 0.4 percent from a month ago.

On a year-on-year basis, PPI rose 6.4 percent, slower than March's 7.6 percent and February's 7.8 percent, which was a eight-year record.

That compared with market expectations for 6.9 percent.

Sheng Guoqing, a bureau analyst, said the consumer inflation was mainly driven by price increases in the non-food sector, while the PPI was dragged by lower prices in oil and ferrous metal related products.

Non-food prices rose 2.4 percent year-on-year, 0.1 percentage points faster than March, led by prices of flight tickets, hotels, and tourist fees due to Tombs Sweeping and Labor's Day holidays.

Regional medical services fee reforms also lift prices of medical and healthcare, according to Sheng.

Food prices fell 3.5 percent, and the decline was 0.9 percentage points narrower than March.

Concerning PPI, Sheng said price declines widened in major industries in April, with factory-gate prices in the oil and gas extraction industry down 4.2 percent from a month earlier.

Economists said PPI will continue to moderate in the coming months but deflation is unlike due to brighter external demand outlook and continued capacity adjustment.

“We expect it to only moderate into low-flationary territory on waning base effect, rather than deep deflationary as we saw between 2012 and the first half last year,” Morgan Stanley said in a note. “Meanwhile, we expect a gradual improvement in core CPI on a mild pass-through from PPI inflation and better job market.”

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