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Wednesday, May 10, 2017, 18:39

China's consumer inflation up 1.2%

By Xinhua
China's consumer inflation up 1.2%
A woman walks through a food market in Beijing on May 10, 2017. China's consumer price index (CPI), a main gauge of inflation, rose 1.2 percent year-on-year in April, up from a 0.9 percent gain in March, China's National Bureau of Statistics said on May 10, 2017. (Greg Baker / AFP)

BEIJING - Growth of China's consumer inflation accelerated in April, as higher non-food prices outweighed continued decline in food prices, official data showed Wednesday.

Consumer price index (CPI), a main gauge of inflation, rose 1.2 percent year on year in April, according to the National Bureau of Statistics (NBS), outpacing market estimates of 1.1 percent. At the same time, the producer price index (PPI), which measures costs of goods at the factory gate, rose 6.4 percent year on year in April, down from 7.6 percent in March and missing expectations of 6.7 percent.

The growth in consumer inflation quickened from March's 0.9 percent expansion and February's 0.8 percent. On a monthly basis, the CPI climbed 0.1 percent.

NBS attributed the pick-up in CPI to higher non-food prices, which grew 2.4 percent year on year in April and rose 0.2 percent over March.

Two national holidays in April had driven up prices for air tickets, hotels and travel services, contributing to the accelerating CPI increase, NBS senior statistician Sheng Guoqing said.

Food prices declined 3.5 percent as vegetable prices fell 21.6 percent from a year earlier on ample supplies. The costs of pork and eggs dropped 8.1 percent and 11.4 percent, respectively.

Excluding volatile food and energy prices, the core CPI increased 2.1 percent in April from a year ago, almost on par with the last reading.

Bloomberg economist Tom Orlik expected the CPI growth to rise in the months ahead, but not high enough to shift the central bank off its cautious, incremental tightening path.

CPI increased 1.4 percent in the first four months of the year. The government aims to keep consumer inflation at around 3 percent this year.

As for PPI, slumping commodity prices are the main driver of smaller gains, but robust demand, efforts to close excess capacity and a weaker yuan, which increases import prices, will prevent a sharper slide in factory-gate inflation, Orlik said.

On a monthly basis, the PPI fell 0.4 percent, the first month-on-month decline since July.

Lian Ping, chief economist at Bank of Communications, said the PPI increase may continue to ease over the rest of 2017 with February being the peak of the year.

The steady price data reinforced views about stabilization in the world's second-largest economy. China's GDP grew 6.9 percent in the first quarter of the year, up from 6.8 percent in the last quarter of 2016 and official target of around 6.5 percent set for the year.

Chinese stocks edged up after the release of the data. The benchmark Shanghai Composite Index added 0.26 percent to end the morning session at 3,088.63 points.

Month on Month, the PPI edged down 0.4 percent, the first monthly drop since July last year.

Price declines widened in major industries in April, with factory-gate prices in the oil and gas extraction industry down 4.2 percent from a month earlier, noted NBS senior statistician Sheng Guoqing.

China's PPI has stayed in positive territory since September, when it ended a four-year streak of declines, partly due to the government's successful campaign to cut industrial overcapacity, which benefited the wider economy.

While the inflation is cooling in recent months, a slide back into deflation is not expected as robust demand, efforts to close excess capacity, and a weaker yuan are all preventing a sharper slide in the index, noted Tom Orlik, chief Asia economist at Bloomberg.

But the deceleration in prices will reduce benefits to the broader economy such as increasing corporate profits, he added.

The PPI figures came alongside the release of the consumer price index, which rose 1.2 percent in April.

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