China's official data released on Thursday shows that the country's inflation rate edged up by only 0.1 percent year-on-year in April, marking the slowest rate since 2021. The figures indicate a weak recovery for the country after lifting pandemic curbs. The producer prices, which measure prices paid by wholesalers, fell for the seventh consecutive month due to sluggish domestic demand and lower commodity costs.
The consumer price index (CPI), the main gauge of inflation, also fell below the 0.3 percent increase forecasted by analysts polled by Bloomberg. The April CPI was the lowest level recorded since February 2021. The figure was also affected by last year's high base for comparison, according to Dong Lijuan, an analyst at Beijing's National Bureau of Statistics.
Food prices, a significant component of the inflation basket, increased by only 0.4 percent in April compared to the previous year, indicating a slowing recovery momentum for the country. The subdued inflation readings suggest that post-Covid recovery momentum continued to weaken in April, according to Ting Lu, the Chief China Economist at Nomura.
China's inflation figures are in contrast to the latest data in the US, where consumer prices rose by 4.9 percent in April as the Federal Reserve attempted to tame escalating prices by hiking rates ten consecutive times.
China has set a growth target of around five percent this year, the lowest goal in decades, with Premier Li Qiang warning that it "will be no easy task." Meanwhile, China's service prices rose one percent in April compared to the previous year as consumers spent more on travel and other leisure services. However, the economic recovery seems unbalanced at this stage, with the service sector normalizing, while the manufacturing sector remains muted, according to Zhiwei Zhang of Pinpoint Asset Management.
