Chinese CPI has missed expectations

Photo by Mark Kolbe/Getty Images

Chinese consumer price inflation rose less than expected in the 12 months to April, increasing 2.3%. The figure, below the 2.4% increase expected, saw the annual rate hold steady for a third consecutive month.

Continuing the pattern of past CPI reports, there was a sharp divergence between food and non-food inflation.

Led by an enormous 33.5% increase in pork prices, up from 28.4% in March, food prices increased by 7.4% from a year earlier, slowing fractionally from 7.6% pace reported previously.

At the other end of the spectrum, non-food inflation remained soft, increasing 1.1% from April 2016. It continued the pattern of the past 12 months where the annual figure has oscillated in a thin range between 0.9% to 1.2%.

By region, prices in urban areas rose by 2.3%, outpaced by a 2.4% gain in rural regions.

On a month-by-month basis, prices fell by 0.2%, matching expectations. It followed a 0.4% contraction in March.

While the CPI figure was slightly below expectations, there was better news on upstream price pressures with producer price deflation coming in at 3.4%. The decrease, narrower than the 4.3% decline registered in March, was well ahead of expectations for a decrease of 3.8%.

The decrease in producer price deflation also marked the shallowest year-on-year decline since December 2014.

Fitting with the recent recovery in bulk commodity prices, at least until recent sessions, raw material prices fell by 7.7% from a year earlier, the smallest year-on-year decline registered in the past 12 months.

There has been next to no market reaction to the data release.

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