BEIJING—China’s factory-gate prices posted the steepest drop in six months in April while consumer prices fell for a third month, underlining the need for more stimulus as policymakers grapple with the economic toll from a trade war with the United States.
A prolonged housing market downturn, high household debt and job insecurity have hampered investment and consumer spending, keeping deflationary pressures alive. Now, the economy is also facing increasing external risks from trade barriers.
However, there are hopes for a de-escalation of tensions as US-China trade talks begin in Switzerland on Saturday.
The producer price index (PPI) dropped 2.7 percent in April year-on-year, worse than a 2.5 percent decline in March but was less than economists’ forecast for a 2.8 percent fall, National Bureau of Statistics data showed on Saturday.
“China still faces persistent deflationary pressure,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “The pressure may rise in coming months as exports will likely weaken.”
