CPI up in April as epidemic ebbs, but deflation a risk

China’s consumer price index (CPI), a main gauge of inflation, and its producer price index (PPI), which measures the cost of goods at the factory gate, continued to decelerate in April.

The declines hint at the risk of structural deflation, and they also mean that the nation has more scope to roll out stimulus measures to offset the economic impact of the coronavirus, experts said.

The wind-down of CPI in April reflected falling food prices as China economy has gradually reopened following the country’s successful prevention and control of Covid-19, according to Dong Lijuan, a senior statistician at the National Bureau of Statistics (NBS).

Food price increases eased due to sufficient supplies of fresh vegetables and increasing hog production and supplies, according to Dong.

The CPI rose 3.3 percent year-on-year in April, down 1.0 percentage points from the March reading, the NBS said on Tuesday. The PPI slid 3.1 percent year-on-year in April, compared with a 1.5-percent fall in March.

Lower food prices, resulting from increasing supplies on the market, and declining bulk commodity prices like oil and iron ore, contributed to the price deceleration, Liu Xuezhi, a macroeconomics expert at the Bank of Communications, told the Global Times on Tuesday.

According to the NBS, food prices rose 14.8 percent year-on-year in April, down 3.5 percentage points from the previous month. The pork price rose 96.9 percent year-on-year in the month, down 19.5 percentage points from March.

“The impact of the coronavirus on consumer prices is weakening and there will not be significant price hikes in the future,” Liu said. He predicted consumer prices will continue to ease through the year.

“The CPI is likely to remain below 3 percent in the coming months due to weak demand,” Liu said.