China disinflationary headwinds continue as consumers hold back

China’s consumer-price index rose for a third straight month in April, increasing at a pace of 0.3% compared with a year earlier, according to official data released Saturday, edging up from March’s 0.1% reading and surpassing the 0.2% growth expected by economists. Meanwhile, the producer-price index fell 2.5% in April from a year earlier for a 19th consecutive month of declines.

Economists say China’s persistently weak inflation readings suggest Beijing is unlikely to be able to count on the country’s 1.4 billion consumers to hit its lofty growth target of around 5% this year, as a drawn-out real-estate slump continues to hold back households’ desire to spend.

Instead, Beijing has been doubling down on its manufacturing industry, partially to offset the drag from the moribund property sector, which at its peak accounted for roughly one-quarter of the country’s economic output. This factory-centric strategy, however, risks further exacerbating downward price pressures and fueling trade frictions, economists caution, pointing to alarm in Western capitals about low-price Chinese exports.

The Biden administration is poised to raise tariffs on clean-energy goods from China as early as next week, with the levy on Chinese electric vehicles set to quadruple to roughly 100%, The Wall Street Journal reported Friday. Chinese exports of critical minerals, solar goods and batteries will also be hit, as the U.S. looks to nurture a nascent domestic clean-energy industry.

In the latest sign of tepid consumer sentiment, Chinese tourists spent less money on average during the recent Labor Day holiday when compared with prior years, despite traveling in greater numbers in the past. Tourism spending per capita over the five-day holiday that concluded Sunday was 11.5% lower than during the same period in 2019, the last prepandemic Labor Day holiday, according to calculations by economists at Citi, who pointed to signs that more travelers traveled to smaller cities where prices tend to be lower.

Industry data released Friday also showed China’s car sales falling 5.7% in April from a year earlier despite fierce price competition, suggesting consumers remain cautious when it comes to spending on big-ticket items amid the economic uncertainty.

Meanwhile, the country’s protracted housing slump shows little sign of bottoming out. New home sales from China’s top 100 developers plunged 45% from a year ago to $43 billion in April, according to private data from China Real Estate Information Corp. Sales were down 13% from the prior month and about 20% lower than the level at the end of 2020, when the downturn began.

China’s top leaders acknowledged insufficient domestic demand in an agenda-setting meeting last week, pledging to speed up government borrowing and calling for further cuts to interest rates and the amount of cash that banks must hold in reserves.

However, economists say there is limited room for aggressive monetary easing. China’s own central bank has also publicly played down that possibility, which economists have attributed to concerns around the impact of a weakening currency and the potential squeeze on banks’ profit margins.

On real estate, a sector whose revival economists say is key to boosting consumer confidence, Chinese leaders at the agenda-setting meeting hinted at new measures to “digest" existing housing inventory, paving the way for a fresh wave of property easing in some of China’s biggest cities. This week, two provincial capitals—Hangzhou and Xi’an—each scrapped all home purchase restrictions.

Officials at last week’s policy meeting didn’t announce any plans to extend direct support for consumer spending. Instead, they highlighted a policy initiative that encourages households to swap out automobiles and home appliances and that helps factory owners upgrade equipment.

However, economists remain skeptical over policy’s usefulness in stimulating consumption, given the tepid results of earlier trade-in programs of this sort. Some say the policy could even encourage Chinese manufacturers to expand, thus exacerbating the structural imbalance between investment and consumption that they blame for China’s disinflationary environment.

China’s core consumer-price inflation, which strips out more volatile categories such as food and energy, rose to 0.7% from 0.6% previously. Food prices dropped 2.7% in April, same as the pace in March. Nonfood prices increased 0.9% in April, compared with March’s 0.7% growth.

Xiao Xiao contributed to this article.

Write to Jonathan Cheng at Jonathan.Cheng@wsj.com