China’s consumer inflation eased to a 14-month low in May, dragged down by moderating gains in pork and food costs, while the decline in prices at the factory gate deepened to a four-year low as oil prices slumped, official data showed Wednesday, reported Caixin.
The consumer price index (CPI), which measures the prices of a basket of consumer goods and services, rose 2.4% year-on-year, the fourth straight monthly decline and down from a 3.3% pace in April, data from the National Bureau of Statistics (NBS) showed. The reading was slightly lower than the median estimate of 2.5% in a Caixin survey of economists.
The data indicate subdued demand in the world’s second-biggest economy as it continues to recover from the impact of the Covid-19 epidemic, with nonfood inflation rising by just 0.4% year-on-year in May, the same pace as in April which was the lowest since December 2009. The lack of inflationary pressure may make it easier for the central bank to lower interest rates to help stimulate demand.
“We believe falling CPI inflation and continued PPI deflation will provide Beijing with more space to implement policy stimulus to offset the impact of Covid-19 on the economy,” economists at Nomura International (Hong Kong) wrote in a report. “The larger-than-expected drop in inflation could also alleviate some recent fears in the bond markets,” they said.