Even runaway pork prices can't push up China inflation

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Chinese consumer inflation was slightly lower than forecast on-year in April while producer prices in the same month posted smaller-than-expected declines, data showed Tuesday.

The consumer price index (CPI) rose 2.3 percent on-year in April, compared with a 2.4 percent forecast by a Reuters poll and in line with March's 2.3 percent on-year reading, Reuters data showed.

Consumer inflation was 0.2 percent lower on-month.

Food prices were the largest contributors to consumer inflation, rising 7.4 percent in April compared to the same period a year ago.

Pork price inflation continued to accelerate to 33.5 percent on-year from 28.4 percent on-year in March, but this was more than offset by a slower increase in vegetable prices, noted Capital Economics' China economist Julian Evans-Pritchard in a note.

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Beijing targets consumer price inflation of about 3 percent.

The producer price index (PPI), meanwhile, declined on-year for the 50th consecutive month, down 3.4 percent, but at a slower rate of decline than in March. A Reuters poll forecast a 3.8 percent decline, after March's 4.3 percent on-year slide. PPI rose 0.7 percent on-month.

Workers walk outside a construction site in Beijing's central business district.
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While the CPI number is generally in line with expectations, the easing in the extended slump in PPI will assuage some fears about the deflationary pressure on the PPI that has been dragging on corporate revenue and corporate profits, said JP Morgan's greater China economist, Grace Ng.

"(That is) painful because the corporate sector is the most leveraged in the system. So some easing on the PPI front is helpful, but that also reflects the fact that global commodity prices have been coming back," Ng told CNBC's "Squawk Box".

That could have an impact on inflationary pressures.

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