China inflation drops to 1.8% year-on-year in April

A customer looks at items displayed on shelves at a supermarket in Shenyang, Liaoning province on April 11, 2014. China's annual inflation fell sharply to 1.8 per cent in April, the lowest in 18 months, official data showed Friday, raising concerns a
A customer looks at items displayed on shelves at a supermarket in Shenyang, Liaoning province on April 11, 2014. China's annual inflation fell sharply to 1.8 per cent in April, the lowest in 18 months, official data showed Friday, raising concerns about the risk of deflation in the world's second-largest economy. -- FILE PHOTO: REUTERS

BEIJING (AFP) - China's annual inflation fell sharply to 1.8 per cent in April, the lowest in 18 months, official data showed Friday, raising concerns about the risk of deflation in the world's second-largest economy.

It was the weakest reading since October 2012, when the statistic stood at 1.7 per cent, and a decline from 2.4 per cent in March, according to data from the National Bureau of Statistics (NBS).

The April figure was well below the 3.5 per cent annual target set by Beijing and is likely to add to 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 country's consumer price index - a main gauge of inflation - increased by 2.2 per cent in the first four months of the year from the same period in 2013, the NBS said in a statement.

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.