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Chinese consumer price index (CPI) inflation grew for the third consecutive month in April, reflecting Beijing’s policy support that seemed to boost consumer demand. However, producer price index (PPI) inflation continued to decline.
According to data from the National Bureau of Statistics released over the weekend, CPI inflation rose 0.3% year-on-year, surpassing expectations of 0.1% and improving from March’s 0.1% increase. Month-on-month, CPI inflation also showed improvement, rising 0.1% in April compared to a 1% decline in the previous month.
This data emerged just days after China reported significantly stronger-than-expected import figures, indicating a rise in local demand thanks to ongoing policy support and stimulus measures. The latest CPI figures suggest some positive momentum in the Chinese economy, which has battled deflation for most of the past year.
Conversely, PPI inflation remained weak, falling 2.5% in April, exceeding expectations of a 2.3% drop, though it was a slight improvement from the 2.8% decline in March. Factory gate inflation has now contracted for the 19th consecutive month, highlighting the pressure on Chinese business activity. Over the past three years, weak overseas demand, sluggish local spending, and a persistent property market slump have severely impacted Chinese businesses, with no clear signs of relief.
While Beijing has introduced numerous supportive measures for businesses over the past year, the extent to which it can continue providing policy support is uncertain, given the high levels of government debt in the country.
