China Inflation April 2021


China: Consumer price inflation comes in at highest level since September 2020 in April

April 9, 2021

Consumer prices fell 0.30% from the previous month in April, following the 0.50% fall recorded in March, amid a sharp fall in food prices.

Inflation increased to 0.9% in April, above March’s 0.4%. April's result marked the highest inflation rate since September 2020. Annual average inflation fell to 1.1% in April (March: 1.3%). Lastly, producer price inflation rose to 6.8% in April from the previous month's 4.4%, marking a multi-year high and driven by higher commodity prices.

Panelists see consumer price pressures rising from their current levels later in 2021 thanks to a more supportive base effect, firmer energy prices and stronger domestic demand, although improved food supply—particularly of pork, as farmers rebuild their hog herds in the wake of African swine fever—will keep a lid on the increase. Producer price inflation is likely to remain elevated over the next few months, but should average lower than April’s level for 2021 as a whole.

On producer price inflation, Nathan Chow, economist at DBS, commented:

“Policymakers could roll out targeted measures to tackle the rising raw material prices. Reportedly, the China Iron and Steel Association is working with the Dalian Commodity Exchange to reform the delivery system to reduce market speculation. Other potential policies include a further tightening of credit growth from specific sectors and releasing certain metals stocks by the State Reserve Bureau. PPI inflation is expected to peak at around 8% mid-year and moderate thereafter as the low-base effect dissipates.”

Our panelists forecast that inflation will average 1.6% in 2021, which is down 0.1 percentage points from last month’s estimate, and 2.3% in 2022.


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China Inflation Chart

China Inflation April 2021

Note: Annual and monthly variation of consumer price index, and annual variation of producer price index, in %.
Source: National Bureau of Statistics of China (NBS).

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