BEIJING (Reuters) -China’s consumer inflation held steady in May while producer price declines eased, but the underlying trend suggests Beijing would need to do more to prop up feeble domestic demand and an uneven economic recovery.
The consumer price index (CPI) rose 0.3% in May from a year earlier, matching a gain in April, data from the National Bureau of Statistics (NBS) showed on Wednesday, below a 0.4% increase forecast in a Reuters poll.
CPI edged down 0.1% from the month before, against a 0.1% rise in April and compared with economists forecasts for zero growth.
The slide in the producer price index (PPI) eased to 1.4% in May from 2.5% in April, compared with a forecast 1.5% decline.
“I think the deflationary pressure has not faded yet,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
“The CPI inflation is slightly negative in m-o-m terms. The improvement in PPI is largely driven by commodity prices such as copper and gold, which is not a reflection of China’s domestic demand,” he said.
China’s economy has struggled to motor on despite the end of stringent COVID curbs in late 2022, mainly due to the ripple effects of a prolonged property sector crisis on investor, business and consumer confidence.
The steady inflation and easing factory deflation in China reflect ongoing efforts to maintain China inflation stability. This reflects policymakers’ commitment to achieving sustainable and balanced growth.
Additionally, the easing of factory deflation suggests improving conditions for businesses, which could boost investment and job creation.
In the coming years, maintaining China inflation stability and addressing factory deflation remain paramount concerns for policymakers.
Furthermore, stability in inflation levels provides a conducive environment for long-term planning and investment.
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