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China's inflation slows to 18-month low

China's annual inflation fell sharply in April to its lowest level in 18 months, official data showed on Friday, raising concerns about the risk of deflation in the world's second-largest economy.

BEIJING: China's annual inflation fell sharply in April to its lowest level in 18 months, official data showed on Friday, raising concerns about the risk of deflation in the world's second-largest economy.

The consumer price index -- a main gauge of inflation -- went up by 1.8 per cent year-on-year last month, the National Bureau of Statistics (NBS) said in a statement, down from a rise of 2.4 per cent in March.

It was the lowest since October 2012, when the statistic stood at 1.7 per cent.

The April figure was also well below the 3.5 per cent annual inflation target set by Beijing and added to analyst worries that deflation could be looming as Chinese growth slows.

Moderate inflation can be a boon to consumption as it encourages consumers to buy before prices go up, but economists say falling prices encourage consumers to put off spending and companies to delay investment, both of which act as brakes on growth.

The producer price index (PPI) -- a measure of costs for goods at the factory gate -- fell by 2.0 per cent year-on-year in April, the NBS said in a separate statement, its 26th month of deflation, albeit less steep than its a 2.3-per cent decline in March.

"As the PPI inflation remained negative for more than two years and the PPI is an important leading indicator for CPI, the risk of deflation is looming large on the horizon," ANZ economists Liu Ligang and Zhou Hao said in a research note.

The NBS said China's CPI increased by 2.2 per cent in the first four months of the year from the same period in 2013.

Last month's price increase was mainly driven by food costs, particularly an 18.6-per-cent jump in fruit prices, according to the statement.

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