By Gina Lee

Investing.com – China’s factory and consumer prices accelerated faster than expected in April, as COVID lockdowns disrupted supply chains.

According to data released earlier today, the Consumer Price Index (CPI), April 2022 saw a 0.4% increase and 2.1% respectively. This compares with the 0.6% growth and 1.6% in March. Investing.com had forecasted a 0.2% increase month-on–month, and a 1.8% growth year-on–year.

The Investing.com forecasted a 7.7% increase in growth, with a March growth rate of 8.3%.

In a statement that was included with the data, Dong Lijuan, a senior statistician at the National Bureau of Statistics said that the COVID-19 epidemics and the higher prices of global commodities have both contributed to consumer inflation.

“Panic buying and stocking among consumers likely also pushed up demand,” Pinpoint Asset Management resident and chief economist Zhang Zhiwei told Bloomberg.

“As supply chain disruption is gradually resolved, inflationary pressure may fade away,” Zhang added.

China’s zero-COVID strategy has placed many Chinese cities under lockdown. Shanghai is one of China’s largest financial hubs. Beijing, the capital, and Hangzhou, an e-commerce center, have implemented restrictions in order to stop the spread of this virus.

Fitch Ratings’ analysts noted that this has created additional pressures in the global supply chains and raised inflation fears due to the sharp drop in Shanghai freight volume volume between April and May. This has led to backlogs at Shanghai port.

“With Shanghai handling around a fifth of China’s port volume and China accounting for 15% of world merchandise exports, shortages of manufactured goods could intensify, adding to existing global inflationary pressures,” the note added.

“This channel is likely to outweigh the effect of slower growth in China on global inflation through a weakening of commodity demand and prices.”

As long as the government could contain the virus and alleviate the supply chain disruption, the rise in consumer prices will be “benign” for the year, China Renaissance Securities Hong Kong Ltd. head of macro and strategy research Bruce Pang told Bloomberg.

The room for policy action by the People’s Bank of China “is more constrained by the policy tightening of overseas major economies and the need to maintain a stable yuan exchange rate,” Pang added.