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Factory deflation deepens in China as Covid-19 slashes demand

Factory deflation deepens in China as Covid-19 slashes demand

Chinese factory prices fell in April to their highest rate in four years, illustrating the impact of the coronavirus on industrial demand in the Chinese economy.

According to data released by China's National Bureau of Statistics, the producer prices index (PPI), which measures commodity costs at the factory gate, dropped 3.1% year-on-year in April, compared to expectations of a 2.6% decline.

The deflation widened from a 1.5% fall in March, as prices slumped in key industries.

Data released last week showed China's export grew unexpectedly in April compared to last year, although a sharper than expected slide in imports indicated weak domestic demand.


Oil and natural gas extraction prices saw the biggest decline last month, falling by 51.4% year-on-year, while oil, coal and other fuel processing prices fell by 19.8%.

On a monthly basis, total producer prices decreased by 1.3%.

On the other hand, the consumer price index (CPI) showed consumer inflation fell to 3.3 percent in April, amid falling food prices.

Moreover, the Central Bank of China boosted economic support, as it provided banks by 1.7 trillion yuan ($240.05 billion) in new yuan loans in April, significantly a year ago, while the growth of the broad money supply accelerated.

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