1st Ld-Writethru: China factory-gate inflation continues to ease

China's producer price inflation continued to ease in April as retreating commodity prices pushed factory-gate costs lower, official data showed Wednesday.

The producer price index (PPI), which measures costs of goods at the factory gate, rose 6.4 percent year on year last month, according to the National Bureau of Statistics (NBS).

The pace retreated from the 7.6 percent growth registered in March and 7.8 percent in February, which marked the highest since 2008.

Month on Month, the PPI edged down 0.4 percent, the first monthly drop since July last year.

Price declines widened in major industries in April, with factory-gate prices in the oil and gas extraction industry down 4.2 percent from a month earlier, noted NBS senior statistician Sheng Guoqing.

China's PPI has stayed in positive territory since September, when it ended a four-year streak of declines, partly due to the government's successful campaign to cut industrial overcapacity, which benefited the wider economy.

While the inflation is cooling in recent months, a slide back into deflation is not expected as robust demand, efforts to close excess capacity, and a weaker yuan are all preventing a sharper slide in the index, noted Tom Orlik, chief Asia economist at Bloomberg.

But the deceleration in prices will reduce benefits to the broader economy such as increasing corporate profits, he added.

The PPI figures came alongside the release of the consumer price index, which rose 1.2 percent in April. Endi