Data published by the National Bureau of Statistics (NBS) showed that in May the consumer price index rose by 0.2% per annum after an increase by 0.1% in April (the weakest increase in 26 months). Economists had expected price growth to accelerate to 0.3%. On a monthly basis, consumer prices fell by 0.2% after falling by 0.1% in April. Consensus estimates suggested a decrease by 0.1%.
NBS also said that producer prices fell by 4.6% per annum, recording the sharpest decline since February 2016 and exceeding economists' forecasts (-4.3%), as faltering demand weighed on manufacturing, impeding the fragile economic recovery. It was also the 8th consecutive monthly price drop. In April, producer prices fell by 3.6%. Prices for production materials fell by 5.9% after a 4.7% decline in April, while prices for consumer goods fell by 0.1% after a 0.4% increase. The cost of durable goods decreased by 1.1% after falling by 0.6% in April.
On a monthly basis, producer prices declined by 2.6%, following a 0.5% drop in April.
China’s low consumer inflation and deflation in its producer prices come in contrast to relatively high inflation in major economies around the world. The latest data is among a batch of economic indicators that point to a cooling economy in China. NBS attributed the broad softness to a general weakness seen in global commodity prices and overall demand.