China's consumer inflation slows to over 2-year low, factory gate deflation deepens

China's consumer prices rose at the slowest pace in more than two years in April, while factory gate deflation deepened, data showed on Thursday, suggesting more stimulus may be needed to boost a patchy post-COVID economic recovery.

The consumer price index (CPI) for the month rose 0.1 per cent year-on-year, the lowest rate since February 2021, and cooling from the 0.7per cent annual gain seen in March, the National Bureau of Statistics (NBS) said. The result missed the median estimate of a 0.4% rise in a Reuters poll.
Producer deflation also deepened last month, underlining the struggles for factories and the broader economy looking to rev-up after the lifting of COVID curbs in December.

The producer price index (PPI) fell at the fastest clip since May 2020 and was down for a seventh consecutive month, declining 3.6per cent from a year earlier after a 2.5 per cent drop the previous month. That compared with a forecast for a 3.2per cent fall.

China's economy grew faster than expected in the first quarter thanks to the lifting of COVID curbs in December but the recovery has been uneven. Recent data showed factory activity contracted and imports fell in April.

The reopening probably put some upward pressure on services inflation, but it was in large part offset by slowing growth in food and energy prices.

Month-on-month, the PPI fell 0.5per cent after remaining flat the previous month, while the CPI fell 0.1% in April after a 0.3% fall in March, bigger than a flat reading in a Reuters poll.

Overall inflationary pressures remain low with the core consumer inflation, which excludes volatile food and energy prices, up 0.7%, unchanged from the previous month.