China Factory Inflation Pauses Slide as Consumer Prices Ease

The producer price index rose 3.4 percent in April from a year earlier.
China Factory Inflation Pauses Slide as Consumer Prices Ease
Factory workers make suits in Jining, China (Photographer: Qilai Shen/Bloomberg)

(Bloomberg) -- China’s factory inflation gained pace, snapping a five-month streak of declines, while the consumer price index eased.

The producer price index rose 3.4 percent in April from a year earlier, in line with the estimate in a Bloomberg survey and up from 3.1 percent in March. The consumer price index climbed 1.8 percent, the statistics bureau said Thursday, versus a forecast 1.9 percent gain and prior reading of 2.1 percent.

Producer inflation pressures remain broadly on an easing trend since reaching an eight-year high in February 2017. In recent months solid external demand has helped underpin the economic expansion even as the trade tensions with the U.S. add uncertainty to the outlook.

China Factory Inflation Pauses Slide as Consumer Prices Ease

“Inflation remains well-behaved,” said Dariusz Kowalczyk, senior emerging-market strategist at Credit Agricole SA in a Bloomberg Television interview. “This means that monetary policy will remain steady. Benchmark rates will not be changed this year and rates used in open-market operations will be moved only marginally higher in lockstep with the Fed in terms of timing but by much smaller increments.”

What Our Economists Say:

“Our view remains that inflation will stay subdued for the year, reflecting slower growth and ebbing upstream price pressure,” Bloomberg economists Tom Orlik and Fielding Chen wrote in a report. “The impact of the recent surge in oil prices will be muted by the relatively low share of oil in China’s energy mix, and the potential for controls on retail gasoline prices.”

Despite a PPI acceleration from a year earlier influenced by a low base, factory prices fell from a month earlier, signaling that a turning point for the moderation in the headline index may not have been reached just yet.

“Inflation pressure will pick up in coming months, but won’t rise to the level that would affect monetary policy,” said Zhu Qibing, chief macro-economy analyst at BOC International China Ltd. in Beijing. “PPI may continue to rebound on supply-side reforms and pollution curbs.”

A gauge of raw materials producer prices picked up to 5.7 percent from 5.1 percent, while indexes for manufacturing and mining also gained. Consumer inflation for food slowed to 0.7 percent from 2.1 percent. A gauge for consumer goods edged lower.

--With assistance from Yinan Zhao Kevin Hamlin and Rishaad Salamat

To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at

To contact the editors responsible for this story: Jeffrey Black at, Jeff Kearns

©2018 Bloomberg L.P.

With assistance from Xiaoqing Pi

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