China’s CPI Growth Eases, PPI Fall Deepens

2020-05-21 10:04:55 《Beijing Review》 2020年21期

Chinas consumer inflation eased further in April on falling food prices as the country fast-tracked restoration of economic activities, while factory-gate prices continued to be bogged down by epidemic-dented demand, offi cial data showed on May 12.

The consumer price index (CPI), the main gauge of infl ation, grew 3.3 percent year on year last month, moderating from the 4.3-percent gain in March, according to data from the National Bureau of Statistics (NBS).

On a monthly basis, consumer prices went down 0.9 percent. Food prices, which account for nearly one third of weighting in the CPI, dropped 3 percent last month.

Vegetable prices fell 8 percent from March over rising supply due to warmer weather, and pork prices continued to retreat amid recovering hog production. Prices of the staple meat in China dropped 7.6 percent in April from a month earlier.

Compared with the same period last year, food prices remained the main driver of consumer inflation in April, while their growth rate tapered from March to 14.8 percent.

Excluding food and energy, the core CPI rose 1.1 percent over last year, down from 1.2 percent in March, according to Dong Lijuan, a senior statistician with the NBS.

Zhao Xijun, a fi nance professor with the Renmin University of China, said the recovery of market supply under the stepped-up resumption of production and business activities helped moderate consumer infl ation.

Smooth logistics, as well as reduced transportation costs due to falling oil prices will also help keep prices down, Zhao said.

In the first four months of this year, CPI went up 4.5 percent year on year on average.

Data on May 12 also showed the producer price index (PPI), which measures infl ation at the factory gate, fell 3.1 percent year on year last month.

T h e r e a d i n g d e e p -e n e d f r o m t h e 1 . 5 -percent drop in March, with price declines widening in major industries.

Aside from the epidemics negative impact on demand, the rout in the global oil market and retreating commodities prices, which delivered big shocks to the industrial chain, were other key drivers for the price defl ation.

Prices of oil and natural gas extraction saw the biggest drop last month, plunging 51.4 percent year on year, while those in the oil, coal and other fuel processing industries went down 19.8 percent.

Wen Bin, chief analyst at China Minsheng Bank, said in a co-authored research note that the CPI will continue to retreat in the coming months, allowing policymakers more leeway to stimulate the real economy as the focus should be tilted toward growth and employment.

Meanwhile, further efforts should be made to spur recovery on the demand side and boost business confi dence as producer prices hinge on both domestic and external factors, he said.

The central bank said in its first-quarter monetary policy report that despite shortterm price disruptions caused by the novel coronavirus epidemic, there was no foundation for persistent infl ation or defl ation.

It vowed to step up counter-cyclical adjustments to support the real economy, make the prudent monetary policy more flexible and appropriate, and continue to deepen reforms of the market-oriented interest rate and the yuan exchange rate formation system.