PPI could further ease this month

A worker at a steel factory in Dalian, Northeast China's Liaoning province, August 10, 2016. [Photo/VCG]

China's producer price inflation eased in April thanks to falling international commodity prices, while consumer price inflation rose moderately in the same month, according to data released on Wednesday by the National Bureau of Statistics.

Analysts said producer price inflation could further ease this month.

The Producer Price Index, which gauges factory-gate prices, rose 6.4 percent year-on-year, down from 7.6 percent in March. On a month-on-month basis, the index dropped 0.4 percent, the first fall since July 2016.

Sheng Guoqing, a senior official of the NBS, said product prices increased in 34 industries out of the 40 surveyed industries, with prices in the oil and natural gas exploration sector rising by 43 percent, the highest among all of the surveyed sectors.

The fall in PPI growth in April was mainly due to falling international oil prices, said a research note from Industrial Securities Co. International oil prices dropped for most of April, which dragged down the factory-gate prices of oil and natural gas products in China.

Moreover, raw material price rises, as a result of China's reduction in excessive capacity in sectors such as steel and coal mining since last year, have led to accelerated re-stocking by companies. And as the stock replenishing process slows, factory gate prices have started to drop, according to a research note issued by Industrial Securities.

China's Consumer Price Index rose 1.2 percent year-on-year in April, up from 0.9 percent in March.

The rise was mainly caused by a pickup in travel and consumption activities during the Tomb Sweeping Day holiday in early April and before the May 1 International Labor Day holiday, said Sheng from the NBS.

The rising CPI is also a natural result of China's changing economic landscape, said Zhou Jingtong, a researcher with the Bank of China's International Financial Institute.

"Due to its improved consumption structure, rising labor costs and population ageing, prices of education, medical services and household services have all risen continually," he said.

China has set a target of keeping consumer inflation under 3 percent for this year. "Despite the mild growth in CPI in April, we should not worry about the challenge of high inflation," Zhou said.