David Scutt, FOREX.com’s APAC Market Analyst, unpacks April’s weak Chinese inflation prints and the policy measures Beijing is weighing to counter persistent deflationary pressure.
April’s negative headline CPI underscores fragile domestic demand, with high household debt, a depressed property market and job insecurity restraining spending. Core inflation’s 0.5% reading—far below the authorities’ 2% aim—confirms scant underlying price pressure despite earlier rate cuts and liquidity injections.
The 2.7 % fall in producer prices, the steepest in six months, extends an unparalleled 31-month deflationary streak. Given the tight correlation between Chinese producer prices and import prices in countries such as the United States and Germany, prolonged PPI weakness risks exporting disinflation abroad. Tentative relief may come from the weekend’s constructive US-China trade talks, which ease fears of further escalation and could stabilise external demand for Chinese goods.
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---- Written by Gus Farrow
---- Expert: David Scutt, FOREX.com APAC Market Analyst
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