Consumer prices in China continued their upward trend in April for the third consecutive month, while producer prices experienced further declines. This dynamic suggests an enhancement in domestic demand as Beijing tackles obstacles in its efforts to stabilise an uncertain economy. The closely monitored figures follow April's imports data surpassing expectations, indicating that a series of policy support initiatives implemented over recent months may bolster consumer confidence, reported Reuters.


According to data released by the National Bureau of Statistics on Saturday, consumer prices in April increased by 0.3 per cent compared to the previous year. This marks a slight uptick from the 0.1 per cent rise observed in March.


“Strip out food and energy prices, and the consumer inflation data suggests a comeback in demand, especially in services,” said Xu Tianchen, senior economist at the Economist Intelligence Unit, as per the report.


Core inflation, excluding volatile food and fuel prices, increased by 0.7 per cent in April, up from 0.6 per cent in March. The overall consumer price index (CPI) rose by 0.1 per cent compared to the previous month, surpassing the forecasted decline of 0.1 per cent in the poll and reversing the 1 per cent drop observed in March.


While some Chinese analysts acknowledge these positive developments, many believe that Beijing still faces significant challenges, according to the report. The current momentum may not be sustainable, as official surveys indicate a slowdown in factory and services activity, and the ongoing housing crisis shows no signs of abating. This situation strengthens the argument for further policy support measures.


“Price hikes by utility companies is another potential driver. The fiscal strains some local governments are facing affect the subsidies they receive, which could be forcing them to pass the extra cost on to households to make ends meet,” Xu added.


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