China factory price gains more sluggish that forecasts

Bloomberg

China’s producer price gains slowed more than expected in April, adding to signs of a potential easing of global reflation fueled by the world’s second-largest economy.
Producer price index rose 6.4 percent from a year earlier, versus a 6.7 percent Bloomberg survey estimate and 7.6 percent gain in March. Consumer price index climbed 1.2 percent, versus 0.9 percent gain a month earlier, the statistics bureau said on Wednesday.
Resurgent producer prices, which rose the most in eight years in February, have helped fuel the world’s shift away from deflationary pressures and their recent easing signals that the boost may not endure for much longer. Moderated inflation also means stronger industrial profits may be harder to sustain and suggests corporate debt burdens may grow heavier.
Global commodities sank to a five-month low last week, nearly erasing the gains since Donald Trump’s surprise US election win. The retreat has been led by industrial metals and oil, two sectors that fueled raw-materials price rises earlier this year on the view that faster global growth would boost demand.
“PPI has already peaked in China and it’s on the way down further from here,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “The shadow-banking crackdown and housing tightening policy will slow investment and a decline in global commodity prices will help China contain price pressures.”
“April’s price data add to the impression of moderating momentum in China’s economy heading into the second quarter,” Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a report. “Rapid gains in producer prices had buoyed corporate profits, lowered real borrowing costs, and made the corporate debt mountain a little easier to scale. Slower price increases reduce those benefits.”