Consumer prices in China rise slightly in May

Consumer prices in China rose slightly on a year-on-year basis in May, breaking a three-month losing streak, while ex-factory prices continued to decline last month.

The country’s consumer price index (CPI), the main gauge of inflation that measures the cost of goods and services, rose 0.2% in May compared with a year ago, data showed on Friday. the National Statistics Office (ONE).

Consumer demand continued to pick up and the market was broadly stable during the month, said Dong Lijuan, chief statistician at NSO.

For its part, the producer price index (PPI), which measures the costs of goods at the factory gate, fell 4.6% in May, compared to a year ago.

The PPI decline, Dong said, could be attributed to lower international commodity prices, overall weak demand in both the domestic and global markets, along with a relatively high base for the same period last year. last year.

Several analysts told CGTN that China is not currently facing worrying levels of deflationary pressures.

“Global commodity prices are one of the factors affecting the price of industrial goods,” said Derek Deng, a partner at Bain & Company. At the same time, as Chinese consumers tend to shop online, those often lower online prices without intermediaries have also affected consumer prices, he added.

“Deflationary pressure is not necessarily bad news for industrial companies,” said Hong Hao, an economist at GROW Investment Group, adding that deflationary pressures in upstream industries are greater than in downstream sectors.

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He added that the difference between the CPI and the PPI continues to increase, which means that the profit margins of industrial companies are also widening.

Bruce Pang, chief economist and head of research at JLL Greater China, told CGTN that there is so far no basis to expect long-term deflation or inflation in the country. This, he said, is based on the current balance of total supply and demand, the adequacy of monetary and credit conditions, and the confidence of market players.

For its part, the producer price index (PPI), which measures the costs of goods at the factory gate, fell 4.6% in May, compared to a year ago.

“In general, China is now in a ‘disinflation’ rather than a ‘deflation’ phase. As the economy continues to improve and effective demand continues to pick up, the annual increase will return to the ‘reflation’ phase,” Pang said, adding that the CPI is expected to rebound in the third quarter of 2023 and gradually return to a level reasonable.

In addition, he stated that lower prices and inflation levels will leave more room for fiscal policy adjustments.

Article republished from the Chinese state media CGTN within the framework of an agreement between both parties to share content. Link to the original article:https://news.cgtn.com/news/2023-06-06/China-s-1st-homegrown-cruise-ship-to-spur-entire-industry-1kpJqBInABi/index.html

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