BEIJING (Reuters) – China’s consumer prices fell for the third consecutive month in April, while factory-gate prices recorded their steepest drop in six months, as policymakers grapple with the economic impact of a trade war with the United States.
A prolonged housing market downturn, high household debt and job insecurity have hampered investment and consumer spending, keeping deflationary pressures alive. The economy is also facing increasing external risks from escalating trade barriers.
However, there are hopes for a de-escalation of tensions as U.S.-China trade talks begin in Switzerland on Saturday.
The consumer price index edged down 0.1% last month from a year earlier, matching a 0.1% drop in March, National Bureau of Statistics data showed on Saturday, and a Reuters poll forecast of a 0.1% dip.
CPI was up 0.1% month-on-month versus the 0.4% fall in March and compared with economists’ forecasts for no change in prices.
Core inflation, excluding volatile food and fuel prices, stood at 0.5% in April from a year earlier, in line with the increase recorded in March.
As the trade war between the world’s two largest economies weighs on exports, China’s retail giants, including JD.com and Alibaba-owned Freshippo, have initiated measures to help exporters pivot to the domestic market. This could further depress prices as business and consumer confidence remain subdued due to the uncertain outlook.
Global investment banks, including Goldman Sachs, have lowered their GDP forecasts for China this year to below the official target of around 5%, attributing the downgrade to the damaging trade war.
The producer price index (PPI) dropped 2.7% in April year on year, worse than a 2.5% decline in March but was less than economists’ forecast for a 2.8% fall.
(Reporting by Qiaoyi Li, Sophie Yu and Ryan Woo; Editing by Jacqueline Wong)
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