China’s consumer price index rose 0.1% in April, marking the slowest increase since early 2021, according to data released by the National Bureau of Statistics. The month-on-month data showed prices actually declined by 0.1%. Economists had anticipated a 0.4% year-on-year increase and no change from the previous month. However, core inflation, which excludes food and energy, remained steady at 0.7% year-on-year and 0.1% month-on-month.

China’s inflation rate has been easing since it hit a recent peak of 2.8% in September, with the latest reading in March showing a rate of 0.7%. In April, service prices rose 1%, faster than the 0.8% increase in March. This was largely driven by the recovery of domestic tourism, particularly in transportation and leisure activities over the Golden Week holiday.

In contrast to China’s data, the latest US inflation data showed consumer prices rose 4.9% in April, easing in the wake of the Federal Reserve’s efforts to tame inflation by hiking rates 10 consecutive times.

Meanwhile, China’s producer price index, which measures prices paid by wholesalers, fell 3.6%. This is a greater decline than the 3.2% year-on-year decrease expected by economists surveyed by Reuters. The latest decline in producer prices comes as China faces rising costs for raw materials, labour and shipping.

The onshore Chinese yuan weakened by 0.04% to 6.9428 against the US dollar shortly after the release of the data. The slower-than-expected increase in consumer prices could prompt the Chinese government to take additional measures to stimulate economic growth, as China looks to bounce back from the impact of the pandemic.

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