CHINA’S factory prices contracted in April, falling by the steepest margin in four years, as manufacturers struggled with deflationary pressures from the coronavirus pandemic, which has crimped demand both at home and abroad.

The producer price index dropped by 3.1 percent from a year earlier in April, compared with a 1.5 percent fall recorded in March, the National Bureau of Statistics said yesterday. Prices for crude oil and other commodities collapsed, contributing to the decline in wholesale prices.

“There will be no V-shaped rebound in economic activity,” said Liu Xuezhi, an analyst at Bank of Communications, following the data release. “The recovery from the COVID-19 will be slow.”

Deflationary factory gate prices are likely to persist, Liu added, pointing to still-worsening overseas demand as other parts of the world struggle to contain the pandemic and oil prices continue to fluctuate.

Many economists believe wholesale prices will notch a further decline in May, though rebounding domestic demand could support a gradual recovery through the end of the year.

Even so, the downward pressure is a worrying omen for Chinese factories, whose profits fell by 36.7 percent in the first three months of the year compared with a year earlier, according to official statistics.

The outlook for industrial profits is equally grim, given still-cool demand for Chinese exports.

Ravaged by the pandemic, China’s economy in the first three months of 2020 suffered its first contraction in more than four decades. The closely watched recovery in commercial activity, following a government push to restart businesses and boost consumption, has so far lagged behind expectations.

China had originally planned by the end of this year to double the overall size of the economy from a decade earlier — a target that economists say requires at least 5.5 percent growth this year.

Premier Li Keqiang was quoted by domestic media as saying Monday that the government will work to meet major economic and social targets this year.

Separately yesterday, China reported a larger-than-expected easing in consumer inflation for April as pork prices moderated and demand continued to remain lackluster.

The consumer price index rose 3.3 percent from a year earlier, retreating from a 4.3 percent year-on-year increase in March and lower than the 3.6 percent increase expected by economists.

Food prices rose 14.8 percent year on year in April, easing from an 18.3 percent increase in March. Pork price inflation, which lifted China’s headline consumer inflation reading over the past year, eased to 96.9 percent in April, compared with a 116.4 percent pace in March, because of an increase in pork supply.

Prices of other staple meats, including beef, mutton and poultry, also moderated their increase last month, while prices for eggs, vegetables and fruit fell.

China’s nonfood prices increased 0.4 percent, compared with a 0.7 percent increase in March, as prices for transportation, clothing and housing fell from a year earlier.

The moderating inflation picture is expected to give China’s central bank more room to stimulate the economy without worries of overheating prices.

(SD-Agencies)