Consumer inflation remaining high
Print Edition
CHINA’S consumer inflation in April remained at its highest level since July 2014 while factory gate prices continued to rise, adding to signs of moderate economic stabilization.
The Consumer Price Index, the main gauge of inflation, grew 2.3 percent from a year earlier in April, the same as in February and March, the National Bureau of Statistics said yesterday.
Food prices, accounting for nearly a third of the CPI basket, rose 7.4 percent. March saw a 7.6 percent increase, following February’s 7.3 percent rise.
Prices in the non-food sector rose 1.1 percent in April, 0.1 percentage points higher than the previous month.
Yu Qiumei, a bureau researcher, said the limited supply of pork continued to drive inflation, while vegetable prices dropped 12.5 percent from February, taming price rises.
The tomb-sweeping and Labor Day holidays also saw flight tickets and hotel tariffs rising 5.2 percent and 2.2 percent, respectively, from March.
The Producer Price Index, a measurement of inflation at the factory gate and an indication of future prices at the consumer end, rose 0.7 percent month on month, faster than the 0.5 percent monthly increase in March.
It was the second consecutive monthly increase since January 2014.
On a year-on-year basis, however, the PPI fell 3.4 percent, the 50th consecutive month of decline, although narrowing from March’s 4.3 percent and February’s 4.9 percent.
HSBC economist Julia Wang attributed improvement in the PPI to rising commodity prices, but said year-on-year PPI deflation might not end in the absence of further domestic demand stabilization.
“We still see downside risks to growth from the housing market, as well as the external sector. This means that talk of a neutral or tighter policy stance is still very premature at the current stage,” Wang wrote in a note.
“Policy-makers are able and should reflate and reform at the same time. Moreover, the restructuring process could have some second-round impact on growth that can be offset by a relatively accommodative monetary and fiscal backdrop.”
The latest inflation figures were generally in line with April’s trade and manufacturing indicators pointing to an ongoing but fragile recovery.
Exports, in yuan-denominated terms, rose 4.1 percent year on year in April, while imports fell for the 18th consecutive month by 5.7 percent, the General Administration of Customs said on Sunday.
Earlier, the official Purchasing Managers’ Index showed that manufacturing dipped to 50.1 in April from 50.2 in March.
On Monday, the People’s Daily ran an interview with an unidentified official saying weak demand and overcapacity would last for the next few years, leading to “L-shaped” economic growth.
The economy will not support massive consumer prices growth, and deflation is equally unlikely due to abundant liquidity and active consumer demands, the official said.
Macro-economic policies should insist on an expansionary fiscal stance and a prudent monetary one, with an emphasis on reforming the supply side, cutting overcapacity, lowering costs, and making up the short-ends, the official said.
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