Investing.com -- Chinese consumer inflation barely expanded in April as local spending saw a limited recovery, data showed on Thursday, while producer inflation hit a near three-year low as the manufacturing sector continued to struggle with slowing demand.
China’s consumer price index rose at an annualized 0.1% in April, data from the National Bureau of Statistics showed. The reading was lower than expectations for a rise of 0.4%, and the prior month’s reading of 0.7%.
Inflation fell 0.1% in April from the prior month, missing expectations that it would remain steady.
The weak CPI reading indicates that consumer spending remained languid despite the lifting of anti-COVID restrictions earlier this year. Measures taken by the Chinese government to shore up domestic spending appear to have had little effect on inflation, as the economy reels from three years of lockdowns.
While Chinese retail spending and travel demand levels picked up somewhat in recent months, they still remained well below levels seen prior to the COVID-19 pandemic.
April’s weak inflation reading is likely to invite more stimulus measures, and potentially looser monetary conditions in the country. Chinese CPI inflation has missed expectations and declined for four consecutive months this year.
The Chinese economy saw a largely uneven recovery this year, with growth skewed towards the service sector, while manufacturing struggled.
The producer price index shrank 3.6% in April, compared to expectations for a drop of 3.2%, and the prior month’s decline of 2.5%. April’s reading was at its weakest level since May 2020, the peak of the COVID-19 pandemic.
The weak reading comes as the Chinese manufacturing sector marked an unexpected decline in April, indicating that the country’s largest economic engine was sputtering amid weak demand. Foreign demand for Chinese goods has also weakened amid worsening global economic conditions this year, limiting a recovery in the manufacturing sector.
The Chinese yuan pared earlier gains and fell slightly after the inflation reading. The currency was once again close to breaching the key 7 level against the dollar.