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China factory prices rise 8% in April, slowest pace in a year

CPI's 2.1% year-on-year gain is largest in five months

The production line of an EV battery maker in Anhui Province. China's latest price data shows there is room for more stimulus to shore up the flagging economy.   © Reuters

BEIJING (Reuters) -- China's producer prices rose at the slowest pace in a year in April, despite the surge in global commodity costs, leaving room for more stimulus to shore up the flagging economy, which faces pressure from heavy COVID-19 curbs.

The producer price index (PPI) rose 8.0% year-on-year, the National Bureau of Statistics (NBS) said in a statement on Wednesday, following an 8.3% rise in March but faster than the 7.7% growth tipped by a Reuters poll.

The consumer price index (CPI) gained 2.1% from a year earlier, the fastest pace in five months, speeding up from March's 1.5% growth and beating expectations for a 1.8% rise.

The slower rise in the PPI was driven by government measures to stabilize commodity prices and increase supply, the NBS said in a separate statement.

China's state planner on Tuesday called for stabilizing energy prices and an acceleration in oil and gas exploration and development.

Beijing has targeted daily coal production at 12.6 million tonnes this year and prioritized energy security in the wake of geopolitical uncertainties caused by the Ukraine conflict.

China's economy slowed sharply at the beginning of the second quarter, as authorities in dozens of cities imposed restrictions to stamp out COVID-19 outbreaks, with Shanghai currently in its sixth week of lockdown.

The capital city of Beijing, which reported 24 new locally transmitted coronavirus cases for Tuesday, has banned residents from eating inside restaurants and suspended all gyms and offline tutoring classes.

The tighter curbs have taken a toll on China's economy with export growth slowing to its weakest in almost two years and factory activity contracting at a steeper pace in April.

The central bank said on Monday it would step up support for the real economy, while closely watching domestic inflation and monetary policy adjustments in developed economies.

The central bank cut the amount of cash that banks must hold as reserves in April with more modest easing steps expected.

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