(Yicai Global) May 11 -- China's consumer price index widened the slowest in more than two years in April while the Asian powerhouse is predicted to stand out from the rest of the world by recording sluggish price growth this year.

The CPI edged up 0.1 percent last month from a year ago after rising 0.7 percent a month earlier as grocery bills expanded slower, according to data released by the National Bureau of Statistics today.

Consumer prices may stay low through this year, said Xu Dongshi, chief macro analyst at China Galaxy Securities. They are predicted to bottom out in the second quarter and the annual growth should tally about 0.8 percent, Xu added.

Other economies are forecast to keep slowing and domestic consumption and investment are limited but prices of industrial products are predicted to stabilize in the second half because of base effects, per Wu Ge, chief economist at Changjiang Securities. However, prices may remain low as short-term economic growth is expected to stay uninspiring, Wu added.

Tamed Food, Energy Prices

Core consumer prices, excluding food and energy, went up 0.7 percent last month, unchanged from March. Prices of poultry rose almost 7 percent, while those of fresh fruit, edible oils, and pork climbed 5 percent, all more modest increases than before. The country's economic recovery has been service-led as prices of services accelerated growth to 1 percent but the commodity price bonanza is over as prices of industrial goods widened declines to 1.5 percent.

The CPI grew much slower last month, mainly because of the high base of last year, according to Dong Lijuan, senior statistician. A year ago, the gauge had surged by 2.1 percent year-over-year.

The high comparison point is partly explained by energy. In April 2022, refined oil prices jumped due to the Russia-Ukraine conflict while this year, such prices have returned to more reasonable levels, per Wang Qing, chief macroeconomic analyst at Golden Credit Rating.

Expanded Decline in PPI

Meanwhile, China’s producer price index, a gauge of inflation for wholesalers, dropped by 3.6 percent in April YoY, widening the pace of falling by 1.1 percentage point.

The accelerating clip of shrinking producer prices is mainly caused by the high base of oil and ferrous metal prices a year ago, and the weak domestic and foreign demand, Dong said.

The high PPI of last year should cause the indicator to slump by more than 3 percent in the second quarter, Xu from China Galaxy Securities said. The lowest point of this year could be this month and after that recovery should take hold, the chief macro analyst added.

In April, the CPI slid 0.1 percent month-over-month, narrowing from a 0.3 percent decline. The PPI fell 0.5 percent MoM.

Editor: Emmi Laine, Xiao Yi