China factory-gate inflation rises for second month as energy costs lift prices

China’s producer prices rose for a second consecutive month in April, marking a further step away from a prolonged deflationary streak as higher energy costs and stronger demand during holidays lifted inflation pressures across the economy, The Wall Street Journal writes.

The producer price index (PPI) increased 2.8% in April from a year earlier, accelerating sharply from a 0.5% gain in March and beating economists’ expectations of a 1.7% rise, according to official data released on May 11 by the National Bureau of Statistics.

It was the second straight monthly increase and follows a 41-month period of continuous declines that began in late 2022, underscoring a notable shift in China’s industrial price environment.

On a monthly basis, factory-gate prices rose 1.7% in April, compared with a 1.0% increase in March.

Consumer inflation also picked up pace. The consumer price index (CPI) rose 1.2% year-on-year in April, up from 1.0% in March and ahead of forecasts for a 0.8% increase.

Officials attributed the rise in consumer prices to higher global oil prices, which have fed through into domestic energy costs, as well as increased travel demand during holiday periods.

Food prices declined 1.6% year-on-year in April, reversing a 0.3% increase in March, while non-food prices rose 1.8%, accelerating from a 1.2% gain.

Core CPI, which excludes food and energy, rose 1.2% from a year earlier, slightly higher than March’s 1.1% increase, indicating gradual underlying price pressures.

On a monthly basis, CPI rose 0.3% in April, rebounding from a 0.7% decline in March.

By Aghakazim Guliyev