• Chinese inflation: Consumer prices rose by 1.2 per cent in the year to April (forecast +1.1 per cent). Non-food inflation rose from 2.3 per cent to 2.4 per cent.
• Annual growth of producer prices eased further from recent 8-year highs, down from 7.6 per cent in March to 6.4 per cent in April (forecast 6.9 per cent).

What does it all mean?

• Chinese consumer prices rose modestly in April. Chinese policymakers want to keep consumer inflation below 3 per cent, so there are few concerns at present. The key driver of inflation remained the non-food component, largely centred on services. In fact healthcare prices are lifting at a 5.7 annual pace. On the flipside food prices remained deflationary – largely driven by an 8 per cent annual decline in pork prices.
• Policymakers would be more comfortable that business inflation continues to ease from recent 8-year highs. The fall in commodity prices is starting to filter through to lower input costs for business. The focus now shifts to next week’s gamut of economic data, including retail sales, industrial production, investment and home prices.

What do the figures show?

Chinese inflation:

• Consumer prices rose from an annual growth rate of 0.9 per cent in the year to March to 1.2 per cent for the year to April. Economists had expected annual growth of 1.1 per cent.
• Annual growth of producer prices eased further from recent 8-year highs, down from 7.6 per cent in March to 6.4 per cent in April (forecast 6.9 per cent).
• Chinese consumer prices rose by 0.1 per cent in April after falling by 0.3 per cent in March.
• Food prices fell by 0.6 per cent in April and non-food prices rose by 0.2 per cent. Non-food prices are up 2.4 per cent over the year with food prices down by 3.5 per cent.
• Annual changes of consumer goods: Food, alcohol & tobacco (-1.8 per cent); Clothing (+1.3 per cent); Rent, fuel, vehicles (+2.4 per cent); Household goods (+0.8 per cent); Transport & communication (+1.8 per cent); Education, culture & recreation (+2.6 per cent); Healthcare (+5.7 per cent); and Other goods and services (+3.4 per cent).

What is the importance of the economic data?

• China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 19th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economic have major implications for the Aussie economy.

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