China's consumer inflation eases, factory prices post wider decline
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E-mail Xinhua, June 11, 2020
China's consumer inflation eased in May on retreating food prices while factory prices continued to drop, official data showed Wednesday.
The consumer price index (CPI), a main gauge of inflation, rose 2.4 percent year on year in May, moderating from the 3.3-percent growth in April, according to data from the National Bureau of Statistics.
On a monthly basis, consumer prices went down 0.8 percent. Food prices, which account for nearly one-third of weighting in China's CPI, dropped 3.5 percent last month.
In breakdown, vegetable prices fell 12.5 percent from April over rising supplies. Pork prices declined 8.1 percent from a month earlier as hog production continued to recover and warm weather dampened consumption.
Compared with the same period last year, food prices remained the main driver of consumer inflation in May, while its growth rate tapered from April to 10.6 percent.
Excluding food and energy, the core CPI rose 1.1 percent year on year in May.
In the first five months of this year, CPI went up 4.1 percent year on year on average.
The orderly restoration of work and production amid a generally stable COVID-19 situation helped moderate consumer inflation, according to Dong Lijuan, a senior statistician with the bureau.
Wen Bin, chief analyst at China Minsheng Bank, said in a co-authored research note that supply and demand will likely stay balanced and overall inflation will remain stable with resumption of work and production being in full swing.
Citing the easing trend in CPI reading, Wen said the country is expected to reach the consumer inflation target of around 3.5 percent for the year 2020.
Wednesday's data also showed China's producer price index (PPI), which measures costs of goods at the factory gate, dropped 3.7 percent year on year in May.
The decline widened from the 3.1-percent decrease in April, NBS data showed.
On a month-on-month basis, the PPI fell 0.4 percent last month, narrowing from the 1.3-percent drop in April.
In the first five months, the average PPI fell by 1.7 percent over the same period last year.
Factory prices of production materials dropped 5.1 percent year on year in May, dragging down the overall PPI by 3.79 percentage points.
Citing the narrowing trend in month-on-month PPI reading, Dong said industrial production further rebounded last month with an improvement in market demand.
Dong attributed the sharper annual PPI decline in May mainly to a higher comparison basis in the same period last year.
Wen said the May PPI fell more than expected due to the impact of the COVID-19 epidemic on domestic enterprises, as well as the low international oil prices that dampened prices of production materials.
However, with inflation continuing to ease, China will enjoy greater room for monetary policy, Wen stated. He suggested monetary policies to further focus on stabilizing employment and ensuring people's lives, as well as increasing support for small firms.
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