CICC Analysis of April Price Data: Demand Insufficiency Issue Still Prominent

In April, the month-on-month CPI was stronger than seasonal factors, mainly driven by gold, travel, and imported beef prices. However, for the third consecutive month, the year-on-year CPI was negative. Additionally, the ongoing decline in the pig cycle, falling prices of replacement products, and weaker prices for clothing, alcoholic beverages, education, and household services compared to seasonal trends indicate that demand is still insufficient. Influenced by tariffs and sluggish construction investment, the year-on-year decline in PPI widened further, with a month-on-month decrease of 0.4%. The decrease in PMI purchasing and factory prices suggests that the month-on-month decline in PPI may continue to widen. Although the US-China tariff negotiations have to a large extent alleviated the risks of declining exports, the issue of insufficient demand remains prominent. Fiscal expansion to support domestic demand is still the key to boosting prices.