China’s consumer inflation quickened last month, holding above zero for a third month, while industrial prices extended a long decline that highlights weak demand in the economy.
The consumer price index rose 0.3 percent from a year earlier, the Chinese National Bureau of Statistics said on Saturday.
That compares with an increase of 0.1 percent in March and a median forecast of 0.2 percent in a Bloomberg survey of economists.
Photo: EPA-EFE
Factory-gate prices remained stuck in deflation, as they have been since late 2022, with the producer price index sliding 2.5 percent last month from a year earlier. Economists surveyed by Bloomberg had expected a 2.3 percent drop after the index declined 2.8 percent in March.
The numbers suggest that deflationary pressure remains a threat to China’s economy, despite green shoots in the manufacturing sector and robust exports.
Falling producer prices are squeezing companies’ profits and making them reluctant to invest. A recent survey of more than 20,000 retailers by the China General Chamber of Commerce showed that average order values contracted by the most in nine months, even though total sales expanded as customer traffic grew during the Workers’ Day holiday.
Meanwhile, China’s credit last month shrank for the first time as government bond sales slowed, while loan expansion was worse than expected in a sign of weak demand.
Aggregate financing, a broad measure of credit, decreased by almost 200 billion yuan (US$28.21 billion) last month from the previous month, according to Bloomberg calculations of data released by the People’s Bank of China on Saturday. That is the first time the measure has declined since comparable data began in 2017, reflecting a contraction in financing activity.
A breakdown of the data shows that more government bonds were repaid than sold in the month, contributing to the decline. Financing from shadow banking — which refers to activities outside the formal banking system — also recorded a drop, weighing on overall credit.
Financial institutions offered 731 billion yuan of new loans last month, lower than a projected 916 billion yuan. The year-on-year growth rate of outstanding loans edged down to 9.1 percent from 9.2 percent in March.
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