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China's producer inflation picked up for the first time in seven months in April, bolstered by surging commodities prices and suggesting industrial demand remains resilient even as trade tensions ratchet up with the United States. But consumer inflation eased from the previous month as food prices rose at a slower pace, official data showed on Thursday.
Analysts and investors are closely watching producer inflation in China for signs of a long-expected economic slowdown that would weigh on industrial profit growth and investment, even if there are no trade shocks. But the country's commodity futures markets are notoriously speculative, making it difficult to tell if price swings are pointing to a real change in underlying demand.
The producer price index (PPI) rose 3.4 per cent in April from a year ago, accelerating from a 17-month low of 3.1 per cent in March, the National Bureau of Statistics (NBS) said on Thursday. On a month-on-month basis, the PPI declined 0.2 per cent.
Analysts polled by Reuters had expected April producer inflation would rebound to 3.5 per cent as steel mills stocked up on raw materials such as iron ore and coking coal to meet a seasonal surge in construction activity. Crude oil and fuel prices have also been on the rise.
Sharper factory-gate price rises could bolster profits for industrial firms, which saw earnings growth slow to the weakest pace in over a year in March. The consumer price index (CPI) rose 1.8 per cent from a year earlier, marginally lower than expectations and slowing from March's gain of 2.1 per cent.
On a month-on-month basis, the CPI declined 0.2 per cent. The core consumer price index, which strips out volatile food and energy prices, rose 2.0 per cent in April, unchanged from March. The food price index rose 0.7 per cent from a year earlier, after rising 2.1 per cent in March as distortions from the long Lunar New Year holiday receded. Non-food prices rose 2.1 per cent, the same as a month ago.
While neither Washington nor Beijing has set a hard timeframe for the imposition of tit-for-tat tariffs, there are worries that the threat of disruptions and higher costs could start to add upward pressure on inflation in China ranging from factory floors to farms.
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