SCIO briefing on China's economic performance in April 2025

Jiupai News:

As mentioned just now, the CPI edged down 0.1% year on year in April, while the core CPI rose 0.5% year on year. What are the reasons behind this? How would you assess this phenomenon? Thank you.

Fu Linghui:

Thank you for your questions. Changes in the CPI are also a major concern for the public. In April, the CPI declined slightly year on year, but shifted from a decrease to an increase on a month-to-month basis, continuing the overall trend of stability. On a year-on-year basis, the CPI dipped 0.1%, unchanged from the previous month. By category, prices rose in seven of the eight major groups, with most categories maintaining an upward trend. Only the price of transportation and communication fell, dropping 3.9%. The slight year-on-year decline in the CPI was mainly due to the impact of lower international oil prices on domestic prices. In April, energy prices fell 4.8% year on year, widening by 2.2 percentage points from the previous month. Gasoline prices dropped 10.4%, which pulled the CPI down by about 0.38 percentage point. On a month-on-month basis, the CPI rose 0.1% in April, compared to the 0.4% decrease in the previous month. The shift from a decline to a rise was mainly driven by rebounds in food and travel services. Prices for some meats, aquatic products and fresh fruits rose month on month, pushing food prices up by 0.2%. Driven by higher demand and the impact of holidays, prices for air tickets, vehicle rentals, hotel accommodations, and tourism grew between 3.1% and 13.5% month on month, contributing to the overall rise in the CPI.

Food and energy prices are more susceptible to short-term factors. To accurately track price trends, it is important to consider not only overall changes in the CPI but also changes in the core CPI. In April, the core CPI, which excludes food and energy prices, rose 0.5% year on year, about the same as the previous month. Service prices rose 0.3%, while prices for industrial consumables excluding energy increased 0.4%. Both growth rates remained essentially stable compared with the previous month. From a dynamic perspective, the core CPI increased by 0.3% year on year in January-February, 0.5% in March, and 0.5% in April, showing an overall steady upward trend. This reflects the effectiveness of macroeconomic policies and the growing impact of expanding domestic demand on prices.

However, it is important to recognize that current prices remain at a low level, which adds pressure to business operations and may affect employment and income growth for residents. Therefore, it is important to keep prices within a reasonable range. Next, we should continue to leverage the combined effects of macroeconomic policies, further expand domestic demand, deepen supply-side structural reforms, improve economic circulation and continuously regulate market order to promote a reasonable rebound in prices. Thank you.