Is Deflation Becoming a Reality in China? Caixin Reports "April CPI Up 0.3%"

0% Range Increase for Two Consecutive Months
PPI Expected to Decline Further by -3.3%

There is a forecast that China's inflation rate will remain in the 0% range for two consecutive months. Last month, the upward trend further weakened, raising concerns that the low inflation seen since 2020 could turn into deflation (a decline in prices).

On the 10th, Chinese economic media Caixin conducted a survey of 15 institutions and projected that the Consumer Price Index (CPI) for April would increase by only 0.3% year-on-year. This not only represents a smaller increase compared to the previous month (0.7%) but also marks the second consecutive month of inflation rates in the 0% range.

Qingchang, Chief Macroeconomic Analyst at CITIC Securities, explained, "In April, pork production increased while demand decreased, causing prices to continuously fall, and fresh vegetable prices also dropped due to seasonal factors. The decline in food prices will lead the CPI trend in April."

Jangwi, Chief Macroeconomic Analyst at Huachuang Securities, also diagnosed that meat and vegetable prices were obstacles to the CPI recovery in April, and that the sluggish employment rate was also a problem. He stated, "Although the recovery in the service sector is showing stability, employment pressure still suppresses the (price) recovery trend."

The Producer Price Index (PPI) is expected to record negative growth for the seventh consecutive month since October last year. According to Caixin's survey, the April PPI is expected to fall by 3.3% year-on-year. China's PPI has consistently recorded negative growth since last October (-1.3%), and the decline deepened to -2.5% in March. If the April PPI meets the forecast, it will be the largest drop in about 2 years and 11 months since May 2020 (-3.7%).

Caixin explained, "Although Brent crude oil prices rebounded to $85 per barrel due to the joint production cuts by OPEC+, prices of bulk raw materials excluding crude oil generally fell," adding, "Domestic prices of rebar and coking coal also declined due to weak demand." Furthermore, citing analyst Jangwi, Caixin predicted that April this year could be the lowest point for both CPI and PPI, noting that the year-on-year declines in CPI and PPI recently have sparked market discussions and concerns about deflation.

This content was produced with the assistance of AI translation services.