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China’s producer price growth moderated further last month from an eight-year high as rising health care costs bolstered consumer inflation.

The producer price index published by China’s National Bureau of Statistics recorded a year-on-year rise of 6.4 per cent in April, dropping further below a February peak of 7.8 per cent and to the slowest pace since December.

The reading came in below a median estimate of 6.9 per cent growth from economists polled by Reuters. The bureau said 5.1 percentage points of the headline figure’s rise was due to a base effect from prices a year prior, with 1.3 ppts coming from new price growth.

The slowdown in producer inflation has been particularly sharp for steel, prices for which rose 22.3 per cent last month – still far more quickly than most other categories, but down markedly from February’s year-on-year jump of 40.1 per cent.

Producer prices also registered their first sequential drop in eight months, falling 0.4 per cent compared to March, with mined and raw materials prices dropping 1.2 per cent and 0.8 per cent, respectively. Steel prices were down 3.1 per cent from the previous month.

Consumer inflation accelerated for a second straight month in April to notch a rise of 1.2 per cent compared to a year ago, just above economist expectations of 1.1 per cent growth.

That was in spite of a 3.5 per cent drop in food prices – which are heavily weighted in China’s consumer price index – as the cost of fresh vegetables fell 21.6 per cent and pork prices dipped 8.1 per cent.

All other categories saw price growth, however, with health care costs rising 5.7 per cent and housing costs up 2.4 per cent. The statistics bureau said the headline figure’s rise was split evenly between a base effect and new price growth at 0.6 ppts each.

In month-on-month terms consumer prices rose 0.1 per cent, with marginal price growth snapping a two-month run of deflation. While food prices fell 0.3 per cent and fuel costs dropped 1.5 per cent from March, health care costs rose 0.7 per cent.

Copyright The Financial Times Limited 2018. All rights reserved.

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