China’s consumer inflation accelerates to 1.5% in April
Print Edition
CHINA’S Consumer Price Index, the main gauge of inflation, rose 1.5 percent year on year in April, a slight increase from the 1.4 percent growth recorded in each of the previous two months, the National Bureau of Statistics said yesterday.
Food prices, which account for nearly a third of the CPI basket, gained 2.7 percent in the month, accelerating from 2.3 percent in March, it said.
The Producer Price Index, which measures inflation at the factory gate and can be a pointer to consumer prices, continued its downward trend, falling 4.6 percent in April, as it did in March.
Yu Qiumei, a researcher at the NBS, said that although there was a slight increase in consumer prices, inflation remains under control.
“The supply of meat and fresh vegetables has been stable, so there are no expectations of a sharp jump in food prices in the near term,” he said.
Zhou Hao, an economist at Australia & New Zealand Banking Group, said that while the figures suggest soft upward price momentum, there remains a risk of deflation.
“We believe there is a need for further monetary policy easing. In particular, the cost of lending for Chinese businesses is still too high,” he said.
China’s economy grew 7 percent in the first three months, its slowest rate in six years, after expanding by 7.4 percent for the whole of last year.
The slowdown prompted the central bank to take policy-easing measures, and in the past two months it has reduced both interest rates and banks’ reserve requirement ratio.
Despite the moves, their impact has yet to filter through the economy. Figures released for April showed only a modest expansion in activity at China’s state-owned manufacturing companies, while activity in privately owned and export-oriented companies fell at its quickest rate for a year.
Trade has also been weak, with both exports and imports falling more than expected last month.
“We expect the central bank to cut interest rates again in the second quarter,” Zhou said.
“The recent pullback of the stock market makes the timing opportune, as any loans are more likely to be channeled into the real economy, rather than the stock market,” he said.
The International Monetary Fund on Thursday forecast that China’s economy will grow by 6.8 percent this year — below the government’s target of about 7 percent — due to reduced investment following corrections in the residential property market.
Growth has been slowing “faster than expected,” it said, though it added that the country is moving toward a more sustainable growth model.
In the first four months, China’s consumer prices gained 1.3 percent year on year, while producer prices fell 4.6 percent. The government has set a full-year inflation target of about 3 percent.
The NBS is set to release other key data, including retail sales, industrial production and fixed-asset investment, on Wednesday.
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