China April CPI expected to moderate to 0.8-1.0% YoY, deflation risk fades
China's April CPI is forecast to ease to 0.8-1.0% year-on-year from March's 1.0%, signaling that deflation pressures have faded but domestic demand remains soft.
China is set to release April inflation data on Monday, with analysts expecting consumer price inflation to moderate slightly from March's 1.0% year-on-year reading. The consensus forecast points to a CPI print in the range of 0.8% to 1.0%, as the boost from Lunar New Year spending fades from the base. Core CPI, which excludes volatile food and energy prices, is expected to hold steady around 1.1% to 1.2%, indicating that underlying demand remains tepid despite the end of the deflation scare.
For interest rate traders, China's inflation trajectory is a key input into the People's Bank of China's policy stance. The PBOC has maintained an accommodative bias to support the economy, but persistently low core inflation limits the urgency for aggressive tightening. At the same time, the fading deflation risk reduces the need for further rate cuts, keeping the policy rate on hold for now. Live rates and charts on NowPrice show how the market is pricing in a steady PBOC stance, with the 10-year government bond yield hovering near recent lows.
Looking ahead, the focus will shift to producer price data and whether the industrial sector can sustain its recovery. A sustained pickup in PPI would signal improving corporate margins and could eventually feed into consumer prices. Traders will also watch for any commentary from PBOC officials following the data release, as well as next month's loan prime rate decision for further clues on the policy direction.