BEIJING (Reuters) -A recovery in Chinese consumer demand needs time to pick up due to the “scarring effect” of COVID-19, but there is no basis for any long-term deflation, an official from the People’s Bank of China (PBOC) said on Thursday.
While the world’s second-largest economy reported better-than-expected gross domestic product growth in the first quarter, some economists said the upbeat headline figures mask underlying weakness in both household and external demand.
Despite the bounce in growth, consumer price inflation is slowing sharply and factory gate prices are in freefall.
The PBOC expected consumer price inflation to pick up later this year, but there is no basis for sustained deflation or increases in inflation in China, Zou Lan, head of the monetary policy department at PBOC, told a news conference in Beijing.
He added that the central bank will pay attention to possible imported inflation.
Amid the global economic recession jitters, Zou said the PBOC will continue to implement prudent monetary policy.
Ruan Jianhong, spokesperson of the PBOC, expected household loan demand to steadily increase.
(Reporting by Kevin Yao and Ellen Zhang; editing by Jason Neely and John Stonestreet)
