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Both consumer and factory gate prices in China saw increases last month compared to the same period a year earlier, mainly driven by fluctuations in global oil prices which lifted domestic energy costs.
The consumer price index (CPI) grew by 1.2% in April from the previous year, up from a 1% year-over-year increase the month before, according to recent data from the National Bureau of Statistics. Month-over-month, the CPI rose by 0.3%, reversing a 0.7% decline recorded in March.
Energy prices in China rose by 5.7% in April compared to the previous year, with gasoline prices jumping by 12.6% from March. Travel demand surged last month due to festivities such as the Tomb Sweeping Festival, Labor Day holidays, and spring break in various regions. This boost in demand led to a 29% increase in airfares and a 3.9% rise in hotel prices from March.
Food prices declined by 1.6%, as supplies of fresh vegetables and pork remained stable, exerting downward pressure on overall consumer prices.
The core CPI, which excludes food and energy, increased by 1.2% year-over-year in April, remaining relatively unchanged from March.
The overall CPI increase aligns with typical seasonal patterns, indicating that domestic prices haven’t fundamentally shifted despite imported inflation influences, according to a senior analyst at Golden Credit Rating International. The market for consumer goods still displays a “strong supply and weak demand” pattern, suggesting room for additional supportive measures. The analyst also predicted that CPI growth for May could rise to approximately 1.4%.
Factory gate prices, reflected by the producer price index (PPI), rose by 2.8% in April from the previous year, accelerating from March’s 0.5% increase. The rise was primarily driven by the energy and chemical sectors. Month-over-month, the PPI increased by 1.7%, up from 1% in the earlier period.
International oil prices contributed to rising costs, with extraction expenses for oil and natural gas climbing nearly 19% last month compared to February. The petroleum, coal, and other fuel processing industries experienced increases exceeding 16%, while the price of optical fiber manufacturing soared by 23%, fueled by strong domestic demand for computing power.
Prices for lithium-ion batteries in the manufacturing sector edged up by 1.6%. Meanwhile, the decline in new energy vehicle prices slowed by 0.7 percentage points, indicating that efforts to curb excessive competition are beginning to show results.
The unexpected rise in PPI in April mainly focused on the energy and chemical sectors, according to China International Capital Corporation. With ongoing ceasefire negotiations between the United States and Iran, international oil prices are expected to remain volatile at high levels.
Financial analysts predict that both the PPI and CPI may continue to increase year-over-year over the next couple of months. The ripple effects of oil price shocks are already emerging globally, with several economies experiencing notable increases in PPI. There is typically a delay before these cost pressures fully translate into broader price increases, suggesting that the peak might still be ahead.
Price changes are expected to cause macroeconomic policy emphasis to shift increasingly toward stabilizing prices. Consequently, the timing for implementing policies aimed at supporting economic growth could be delayed.
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