China's factory inflation defies global surge

BEIJING, May 12 (Reuters): China's factory-gate inflation eased to a one-year low in April as state-driven production efforts supported supply and Covid-19 lockdowns in key industries cooled demand, giving policymakers headroom for more stimulus to shore up a flagging economy.

Consumer prices rose at their fastest pace in five months as widespread Covid-19 lockdowns across major cities hit supplies of household items, but remained relatively benign despite surging global commodity costs, which have forced central banks elsewhere to rapidly raise interest rates.

The producer price index (PPI) rose 8.0 per cent year-on-year, the National Bureau of Statistics (NBS) said in a statement on Wednesday, slower than the 8.3 per cent rise in March but faster than the 7.7 per cent growth tipped by a Reuters poll.

"Producer price inflation will continue to drop back over the coming quarters," said Julian Evans-Pritchard, senior China economist at Capital Economics.

"Although there is still a great deal of uncertainty caused by the war in Ukraine, we generally think global commodity prices will end the year lower."

The slower rise in the PPI was driven by government measures to stabilise commodity prices and increase supply, NBS official Dong Lijuan said in a separate statement.

China's state planner on Tuesday called for stabilising energy prices and an acceleration in oil and gas exploration and development.