China’s consumer price inflation fell below 1 percent last month, official figures showed yesterday, a sign of weak demand as the world’s second-largest economy tries to recover from its COVID-19-pandemic-driven slump.
The consumer price index — the main gauge of inflation — came in at 0.7 percent, down from 1 percent a month earlier, Chinese National Bureau of Statistics data showed.
Beijing is targeting an average inflation rate of 3 percent for this year, which is still far below the current rates of many developed economies.
Photo: EPA-EFE
Analysts had expected a faster pace for last month, with economic activity picking up again after the abandonment of its “zero COVID” restrictions at the end of last year.
The producer price index, which measures the cost of goods leaving factories, shrank for the sixth consecutive month, with prices falling 2.5 percent — indicating lower margins for businesses.
“Economic recovery is on track, but not strong enough to push up prices,” Pinpoint Asset Management Ltd (保銀私募基金管理) chief economist Zhang Zhiwei (張智威) wrote in a note.
“This suggests the economy is still running below its potential,” he added, suggesting that the data made an interest rate cut more likely.
Fresh fruit prices rose 11.5 percent year-on-year, and pork, the most consumed meat in the country, increased 9.6 percent. The cost of fuel for transportation fell 6.4 percent.
“We think consumer price inflation will rebound in the coming months as the labor market tightens again,” Capital Economics Ltd analysts said in a note.
“But it will be well below the government’s ceiling of around 3 percent, and the increase in inflation will be far smaller than what was seen elsewhere when they opened up,” they said.
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