Financial News: China Inflation Weakest Since 2021; Factory Gate Deflation

China Inflation Weakest Since 2021; Factory Gate Deflation Deepens

05/11/2023 - 03:05:00 (RTTNews)

(RTTNews) - China's consumer price inflation reached its lowest level in more than two years in April largely due to the base effect and factory gate deflation deepened, providing space of monetary policy easing.

The consumer price index posted an annual increase of 0.1 percent from the last year, slower than the 0.7 percent rise in March, the National Bureau of Statistics reported Thursday.

This was the weakest inflation since February 2021 and also slower than economists' forecast of 0.4 percent rise. Moreover, inflation remained well below Beijing's full year target of around 3.0 percent.

At the same time, core inflation that excludes food and energy remained unchanged at 0.7 percent in April.

Food prices gained 0.4 percent annually after a rise of 2.4 percent in March. At the same time, non-food prices edged up 0.1 percent.

In a separate communiqué, the NBS said producer rises declined 3.6 percent in April, which was bigger than the 2.5 percent drop in the preceding period. The annual fall was the biggest since May 2020 and also the expected fall of 3.2 percent.

Subdued consumer price inflation as well as sharp fall in factory gate prices would provide space for the central bank to take measures to cushion economic growth. Recent data suggested that the economy is losing momentum after the lifting of Covid restrictions boosted growth in the first quarter.

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