China’s consumer inflation picks up in April
BEIJING: China’s consumer inflation rose at its quickest pace in nearly half a year, official data showed Wednesday, reflecting the growing costs of the country’s zero-COVID curbs and high commodity prices. The damage from Beijing’s strict zero-COVID strategy has been increasingly reflected in economic data, as lockdowns in key cities such as Shanghai snarled supply chains and pushed up transportation prices. April’s consumer price index (CPI), a key gauge of retail inflation, rose more than expected at 2.1 percent on-year, picking up from levels seen the month before, said the National Bureau of Statistics (NBS).
This was due to “factors like the domestic epidemic and continued rise in international commodity prices,” the bureau’s senior statistician Dong Lijuan said in a
statement. Since April, China’s biggest city Shanghai had been almost entirely sealed off. Most of its 25 million residents have been confined to their homes, while goods piled up at its port as authorities rush to stamp out the worst COVID resurgence since the early days of the pandemic. Dong said that “due to the rise in logistics costs during the pandemic and increase in demand for stockpiling,” prices of potatoes, eggs and fresh fruits ticked up. The latest figures also showed that after four consecutive months of contraction, food prices overall rose for the first time on-year in April. Meanwhile, the producer price index (PPI) — which gauges the cost of goods at the factory gate-came in at 8.0 percent, higher than expected but down slightly from in March.
A key reason was that prices of commodities such as crude oil and non-ferrous metals remained at a high level, Dong said. Virus-related supply disruptions likely pushed up producer prices as well, said Julian EvansPritchard of Capital Economics in a recent report. But he added Wednesday that “the main source of higher prices continues to be oil, gas and iron ore,” and that factory-gate prices of consumer durables and electronics were unchanged last month. “We think producer price inflation will continue to drop back over the coming quarters,” he said.
April’s weak economic data follows industry data released Tuesday that showed China saw its largest drop in car sales in two years-likely due to consumer sentiment battered by COVID restrictions. Vehicle sales plunged a steep 35 percent to about 1 million in April, according to China Passenger Car Association-a drop not seen since March 2020.