The People’s Bank of China (PBOC) building in Beijing, China on Tuesday, April 18, 2023. China’s economy grew at the fastest pace in a year in the first quarter, putting Beijing on track to meet its full-year growth target to achieve This provides important impetus and at the same time helps to protect the global economy from a downturn. Source: Bloomberg
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China’s consumer price index rose 0.1% year-on-year in April, the slowest since early 2021. Month-on-month prices fell 0.1%.
Economists polled by Portal expect consumer prices to rise 0.4% yoy and remain flat from the previous month.
The April reading comes after China’s inflation rate fell to 0.7% in March after hitting a recent peak of 2.8% in September.
According to the National Bureau of Statistics, inflation in China was led by food and services – food prices rose 0.4% year-on-year and services prices rose 1%. Consumer goods prices, meanwhile, fell 0.4%.
The Chinese onshore yuan weakened 0.04% to 6.9428 against the US dollar shortly after the release.
China’s producer price index, which measures prices paid by wholesalers, fell 3.6%. Economists polled by Portal were expecting a 3.2% year-on-year decline after falling 2.5% the previous month.
That is in stark contrast to the latest overnight US inflation data, which showed consumer prices rose 4.9% in April – an easing on the back of the Federal Reserve’s effort to contain inflation by raising interest rates 10 times in a row.
Inflation has largely eased in China after reopening, leading market watchers to question whether the world’s second-biggest economy is headed for deflation, BofA’s chief China economist Helen Qiao wrote in a note on Tuesday.
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“It almost seems as if major central banks are struggling to rein in the inflation monster [People’s Bank of China] “Would have ranked high on the inflation control scorecard,” she wrote.
Qiao added that China has managed to keep CPI inflation at an average of 1.8%, close to the lowest 3-year average since 2003.
Now China’s core CPI inflation is already well below Japan’s level, BofA economists noted.
China’s low inflation, while not yet at deflationary levels, may reflect insufficient demand.
“Although households have already seen significant pent-up demand from tourism over the past few holidays, they are still reluctant to spend on goods, especially large purchases (home appliances, cars, etc.),” Qiao wrote in the note.
“Weak labor markets and a slower housing market recovery continued to weigh on consumer sentiment,” she wrote.
– CNBC’s Lim Hui Jie contributed to this report
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