China producer price decline continues to narrow

China's producer prices continued to fall in April, but the decline was narrowing at a faster pace in a sign of improved aggregate demand, data from the National Bureau of Statistics showed on Tuesday.

    The producer price index, a measure of costs for goods at the factory gate, fell 3.4% year on year, narrowing from a 4.3% drop in March and 4.9% in February, according to China's (Xinhua) News Agency.

    The reading also marked the 50th straight month of declines as China's economic slowdown and industrial overcapacity weighed on prices.

    Minsheng Securities attributed the easing contraction to a lower comparison last year and increasing infrastructure and property investments during the period, which drove up prices in certain upstream industries. But with property investment growth unlikely to sustain, the upward momentum will not continue for long, it added.  Month on month, producer prices in April edged up 0.7%. 

    Output prices of production materials went down 4.5%year on year, contributing 3.3 percentage points to the PPI drop during the month, while those of consumer goods edged down 0.2% during the period. The data came along with the release of the consumer price inflation index (CPI), which stayed flat from the previous two months at 2.3%.