New Delhi

China's consumer prices have marked a steady climb for the third consecutive month in April, signalling a promising revival in domestic demand while the country continues to face economic challenges.

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The latest data from the National Bureau of Statistics revealed a 0.3 per cent year-on-year increase in consumer prices, surpassing expectations and indicating a strengthening consumer sentiment.

Senior Economist Xu Tianchen from the Economist Intelligence Unit commented on the data, noting that excluding food and energy prices, core inflation grew by 0.7 per cent in April, reflecting resurgence in demand, particularly in the services sector.

This uptick in consumer prices signifies a positive trend in domestic consumption patterns.

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While the consumer price index (CPI) in April showed a slight uptick, the producer price index (PPI) continued its downward trajectory, dropping by 2.5 per cent year-on-year.

Despite the decline in producer prices, the easing of the PPI slide from the previous month suggests a gradual stabilisation in industrial activity.

Analysts caution that despite the encouraging signs of recovery, Beijing faces ongoing challenges in sustaining momentum, especially amid cooling factory and services activity.

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Municipal debt concerns and a prolonged housing crisis pose additional hurdles, underscoring the need for continued policy support to bolster economic growth.

Zhou Maohua, a macroeconomic researcher at China Everbright Bank, said that balancing policy measures to support both demand and supply dynamics would be essential.

While domestic demand shows signs of improvement, challenges persist in the industrial manufacturing sector, indicating the necessity for a comprehensive approach to economic recovery.

In response to the economic landscape, China's central bank has plans for flexible and effective monetary policies aimed at promoting a moderate recovery in consumer prices.

The pledge to utilise policy tools to stimulate growth aligns with the Politburo's directives to strengthen economic expansion through strategic interventions.

Chief Economist Bruce Pang from Jones Lang LaSalle highlighted the imperative for proactive policy measures to address the lingering issue of insufficient effective demand.

As China aims to achieve its economic growth target of approximately 5 per cent in 2024, sustained policy support will be essential.

(With inputs from Reuters)