Data released on May 11th shows that China's Consumer Price Index (CPI) in April rose by 1.2% year-on-year, while the core CPI, excluding food and energy prices, also increased by 1.2% compared to the same period last year.
The Producer Price Index (PPI) for industrial products climbed by 2.8% year-on-year in April, with the growth rate expanding compared to the previous month.
On a year-on-year basis, the CPI maintained a mild recovery, with the growth rate widening by 0.2 percentage points from March. Specifically, non-food prices increased by 1.8%, consumer goods prices rose by 1.4%, and service prices went up by 0.9%.
Prices for industrial consumer goods rose by 3.5% year-on-year, an acceleration of 1.3 percentage points from March. Influenced by fluctuations in international commodity prices, domestic gasoline and gold jewelry prices saw significant changes. Gasoline price growth accelerated to 19.3%, while the increase in gold jewelry prices moderated to 46.9%.
Month-on-month, the CPI shifted from a 0.7% decline in March to a 0.3% increase in April, exceeding the seasonal level by 0.4 percentage points.
Influenced by international crude oil price movements, domestic energy prices increased by 5.7% month-on-month, with gasoline prices surging by 12.6%. Due to travel demand around the Qingming Festival, May Day holiday, and some regional spring breaks, demand for travel services increased significantly. Prices for air tickets, vehicle rentals, travel agency fees, and hotel accommodations rose by 29.2%, 8.6%, 4.5%, and 3.9% respectively, all exceeding seasonal levels.
Meanwhile, food prices decreased by 1.6% month-on-month, with the rate of decline narrowing by 1.1 percentage points from March. With warmer weather bringing abundant supplies of fresh vegetables and fruits to market, their prices fell by 6.4% and 2.3% respectively. Ample supplies of pork and aquatic products led to price decreases of 5.7% and 1.2% respectively.
The CPI has now shown mild year-on-year growth for seven consecutive months, and the month-on-month figure has turned positive in April after a decline in March. This mild CPI increase is seen as a positive signal of improving economic development and gradual recovery in domestic demand. It is particularly noteworthy that prices for items like pork have been consistently declining in recent months, exerting a significant downward pull on the CPI. This indicates that the main driver of the mild CPI increase is the rise in service prices, reflecting a sustained increase in service consumption demand.
The upward pull from the concurrent PPI increase on the CPI recovery also warrants attention. Looking ahead, whether the CPI can maintain its mild upward trend depends on the further implementation effects of more proactive fiscal policies and appropriately accommodative monetary policies. Structurally, it is mainly influenced by two factors: first, if policies like purchase and storage prove effective, leading pork prices to stop falling and rebound, their downward pull on the CPI would weaken; second, changes in import prices for energy sources like oil—if the upward trend in international markets reverses, it would help stabilize prices for related major categories of goods or services within the CPI.
The PPI, which turned positive year-on-year in March after 41 consecutive months of decline, continued its upward trend in April, with the growth rate expanding by 2.3 percentage points from March. Among the major industries with price increases, non-ferrous metal mining and dressing rose by 38.9%, non-ferrous metal smelting and rolling processing increased by 22.5%, and petroleum and natural gas extraction climbed by 28.6%.
The reasons for the increase include positive results from comprehensive measures to address "involution-style" competition, which have improved supply-demand dynamics in some sectors, leading to price increases. Additionally, rising demand in certain industries, such as the ongoing equipment renewal in manufacturing boosting steel demand, has driven prices higher. International input factors have also influenced price increases in domestic petroleum-related industries.
Month-on-month, the PPI increased by 1.7%, with the growth rate expanding by 0.7 percentage points from March. Specifically, rising international crude oil prices drove up prices in related domestic industries. Petroleum and natural gas extraction prices rose by 18.5% month-on-month, while petroleum, coal, and other fuel processing prices increased by 16.4%. Meanwhile, increased demand in some sectors and the continuous optimization of market competition order have also contributed to price increases or narrowed declines in related industries.
The mild increase in PPI is generally beneficial for improving the expectations of business entities and the operational conditions of upstream industries like energy and raw materials. It can also, to some extent, improve the sales revenue and profit margins for enterprises in sectors like petroleum and natural gas, coal, and non-ferrous metals. However, given that terminal consumer demand growth remains relatively moderate, attention is needed in the next stage regarding its impact on midstream and downstream industries.
Both year-on-year and month-on-month PPI trends reflect positive macroeconomic development. Although the recent mild PPI increase is closely related to fluctuations in international oil prices, the primary driving factors are domestic, with policy effects from stimulating consumption and expanding investment gradually becoming evident.
Experts indicate that, based on the implementation of recent policies, measures to promote household consumption and effective investment are being vigorously implemented. Simultaneously, policies addressing "involution-style" competition have achieved good results. These developments are conducive to achieving this year's price regulation targets, promoting a virtuous economic cycle, and realizing increased efficiency for enterprises and higher incomes for residents and public finances.
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