Chinese producer prices declined at their slowest rate in 16 months in April, official data showed today, a positive sign for the world's second-largest economy.
The producer price index (PPI), which measures prices of goods at the factory gate and is a leading indicator of consumer inflation, fell by 3.4 per cent from a year ago, the National Bureau of Statistics (NBS) said in a statement.
The figure was ahead of the median estimate of a 3.7 per cent decline in a Bloomberg News survey of economists, and the indicator's best performance since December 2014.
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Moderate inflation can be a boon to consumption as it pushes buyers to act before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth.
China's economy, a vital driver of global expansion, grew 6.9 per cent last year, the slowest in a quarter of a century.
Producer prices in the Asian giant have been falling for years, and low consumer inflation had stoked fears of deflation until recently.
The consumer price index rose 2.3 per cent year-on-year in April, the NBS said in a separate statement, in line with expectations and the same figure as the previous two months.
The figures may bring some cheer to the Chinese economy, which is grappling with slowing growth, huge overcapacity and mounting debt problems.
Month-on-month, the PPI increased by 0.7 per cent, the second rise in a row.
NBS analyst Yu Qiumei said in a statement: "Price increases in some industrial sectors accelerated", including in natural resource extraction.
Beijing is seeking to retool China's economy away from the investment- and export-led growth of the past to one more driven by consumer demand. It is also trying to reform lumbering, loss-making state-owned enterprises to make the sector more efficient.
But the transition is proving bumpy, raising fears of a hard landing, and global markets have been alarmed by slowing expansion.
The government has been loosening monetary policies since late 2014 and more recently has been stepping up investment, but growth in the first three months of the year still slid to 6.7 per cent.
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During that period, the service sector accounted for 52.8 per cent of value-added industrial output, 13.3 percentage points higher than secondary industry, while consumption accounted for 71 per cent of the growth, up 13 percentage points, Xu said.
Meanwhile, value-added industrial output of the high-tech manufacturing sector and innovative industries increased 10.6 per cent and 10.87 per cent, respectively, from the previous year, he said.
The economy is in better shape for cleaner development, with a five-percent drop of energy consumption per unit of GDP and continuous declines of major pollutant emissions, he said.
Besides, the country has exceeded its annual target for job creation, adding over 13 million new jobs in 2016.
NBS said China's producer price index (PPI), which measures costs for goods at the factory gate, narrowed its decline in 2016 from the previous year.
PPI for the whole of 2016 dropped 1.4 per cent year-on- year. The pace of decline was 3.8 percentage points narrower compared to that of 2015.
The reading increased 5.5 per cent year-on-year in December, 2016, the biggest gain since September, 2011 and marked the fourth straight month of increases.
A rebound in PPI could boost corporate profits and lower financing costs, said Deng Haiqing, chief economist with JZ Securities.
The NBS also released figures on China's consumer inflation in 2016, with the consumer price index rising two percent, a reading below the government's 3-per cent target.
