China's consumer inflation was more muted than expected in April and producer prices fell for the 37th consecutive month, adding to concerns about growing deflationary pressures which are likely to trigger further policy easing.
Annual consumer inflation picked up a shade to 1.5 percent in April, the National Bureau of Statistics said on Saturday, edging up from 1.4 percent in March but below the 1.6 percent predicted by analysts.
A seasonal jump in food prices aside, some economists said the figures pointed to moderate price pressures and lacklustre domestic demand in the world's second-biggest economy.
"Consumer prices remained sluggish in April and the risk of deflation still lingers," analysts at Haitong Securities said in a note. "There is a need to cut interest rates again."
Worried about China's economy, whose growth cooled to a six-year low of 7 percent in the first three months of this year, the central bank has cut interest rates and relaxed banks' reserve requirements four times in six months.
Indeed, the central bank acknowledged the growth challenges on Friday, when it said the economy faced headwinds and that the inflation outlook was benign, but ruled out the need for quantitative easing.
Wary about following in the footsteps of Japan, where a decade-long fall in consumer prices has hurt the economy, Chinese officials have warned about the danger of deflation, saying a cooldown in inflation to under 1 percent would raise red flags.
A Reuters poll in April showed analysts expect the central bank would cut interest rates by 25 basis points this quarter, and lower the reserve requirement ratio (RRR) by 100 basis points over the course of this year.
Many economists also expect more support measures for the ailing housing market.
Saturday's data showed higher food prices drove April's inflation, with pork prices climbing 8.3 percent. Overall annual food inflation was also buoyant, quickening to 2.7 percent in April, compared to 0.9 percent for non-food inflation.
And in a sign that China's anti-graft campaign led by President Xi Jinping had also dented spending, liquor prices fell 0.5 percent in April for the 19th consecutive month.
But producer prices remained stubbornly weak, with the producer price index sliding 4.6 percent.
The market had expected producer prices to fall 4.4 percent on an annual basis after a decline of 4.6 percent in March.
Lower extraction costs for miners and cheaper raw material prices led the drop in producer prices, data showed. Extraction costs tumbled 19.6 percent from a year ago in April and raw material prices slid 8.3 percent.
"The producer price index will not return into positive territory within this year," said Li Huiyong, an analyst at Shenwan Hongyuan Securities. "This provides space for monetary policy. We predict a rate cut and a RRR cut will be staggered over the first-half of this year."
Weighed down by a property downturn and slackening growth in manufacturing and investment, China's economic growth is expected to slow to a quarter-century low of around 7 percent this year, from 7.4 percent in 2014.
And data suggests that the recent flurry of policy easing has yet to stoke a rebound in activity.
Consumer inflation is still far short of Beijing's 3 percent target for 2015, and trade data released on Friday also pointed to entrenched weakness.
Worried about the risk of job losses, China's leaders are likely to resort to fiscal stimulus to revive growth, government economists told Reuters this week.
Data on industrial output, retail sales, investment and bank lending will be released next week. Economists had hoped those readings would show some signs the economy was stabilising.