Analysts polled by Reuters expect annual consumer price inflation to have moderated to 3.3 percent, from 3.6 percent in March, remaining well below the government's 4 percent target. Month-on-month, prices are expected to have dropped by 0.5 percent after March's 0.3 percent fall.

Rising inflation last year had prompted Chinese policymakers to sharply reduce credit supply, especially to private borrowers, throwing the real estate sector into disarray and cooling economic growth.

The government has eased economic policies since in a program of "fine-tuning" which has seen it cut 100 basis points from the required reserve ratios of banks to support credit growth since autumn, while cutting business red tape and taxes.

"We think April data would show that economic activity is rebounding modestly, but may not be sufficient to clear all the doubts," analysts at UBS said in a note to clients.

Producer prices are likely to have fallen by 0.5 percent on year in April, the Reuters poll showed. That would be more than the 0.3 percent drop in producer prices for March, as a slow real estate sector reduced the demand for raw materials.

International crude oil prices sank in April compared with March this year, and April's prices were also lower than a year before.

However, Chinese gasoline and diesel prices have been at historical highs since mid-March. Power prices are also at record highs as China raises state-set prices to gradually bring them in line with generation costs, although residential prices are adjusted slowly to minimize the impact on inflation.

An earlier purchasing managers survey indicated that input prices are rising, but increased buying by factories primarily reflects restocking, with domestic demand still tepid.

Overall, the PMI surveys also pointed to an uptick in the economy after a trough in the first quarter. But both the official PMI and an independent survey published by HSBC showed a continuing discrepancy between growth enjoyed by larger firms and the difficulties of smaller firms struggling to get credit.

Continued difficulty in getting loans may have contributed to a softening in fixed asset investment, which analysts expected to have slowed to 20.5 percent growth on year in April, down from 20.9 percent in March.

Fixed asset investment has underpinned the economy as export growth has wilted, though government action to crimp the speculative real estate bubble it has fuelled is beginning to bite.

Retail sales, also due on Friday, are expected to be steady year-on-year from March's 15.2 percent level. Economists point to urban and rural per capita incomes rising faster than GDP so far this year as offering key support to consumption growth as inflation eases.

(Reporting by Lucy Hornby; Editing by Richard Borsuk)

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