Coronavirus: China’s factory prices hit four-year low as pressure continues to mount on manufacturers

China’s producer price index fell to minus 3.1 per cent in April, the lowest point since minus 3.4 per cent in April 2016

Consumer inflation continued to fall, with the consumer price index 3.3 per cent in April

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China’s consumer price index (CPI), meanwhile, rose by 3.3 per cent from a year earlier, decelerating sharply from a 4.3 per cent gain in March. Photo: EPA-EFE

Published: 9:39am, 12 May 2020Updated: 10:44pm, 12 May 2020

China’s manufacturers continued to suffer from the fallout of the coronavirus pandemic, with factory gate prices plunging further in April.

The producer price index (PPI), reflecting the prices that factories charge wholesalers for their products, fell to minus 3.1 per cent year-on-year last month, according to a National Bureau of Statistics (NBS) release on Tuesday.

That was worse than the 1.5 per cent fall in March and the 2.5 per cent contraction forecast in a Bloomberg survey of analysts.

It marked the worst decline since minus 3.4 per cent in April 2016, and suggests that with pressure mounting on the domestic and international economies, China’s manufacturers are unable to charge the price they would like for their products.

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China’s consumer price index (CPI), meanwhile, rose by 3.3 per cent from a year earlier, decelerating from a 4.3 per cent gain in March, the NBS said. Analysts polled by Bloomberg had expected an inflation rate of 3.7 per cent.

This was the lowest monthly inflation rate in China since 3.8 per cent in October 2019.

The pace of the consumer and producer price indices continue to fall, emphasising the inherently weak demand in China’s economy. While policymakers are hoping for a rush in domestic demand to drag the country out of its economic malaise, these figures suggest it may need a jump start.