The National Bureau of Statistics said that the annual consumer price index rose in May to 0.2 percent, compared to 0.1 percent in the previous month, which was in line with experts’ expectations reported by Bloomberg.
Significantly different from the increases recorded in developed countries, food prices in China did not change much in one year (+0.1 percent), nor were prices of consumer goods (-0.3 percent) and services (+0.9 percent).
Production prices (exit prices from factories) recorded a further decline, indicative of slowing domestic demand and lower costs of raw materials such as iron and crude oil.
Therefore, the producer price index fell by 4.6 percent in May, according to the Census Bureau, which is more than that expected by Bloomberg analysts (-4.3 percent). This is its weakest pace since 2016.
The decline in this indicator is explained by “the decline in international raw material prices in general and the relative weakness in demand for industrial products in China and abroad,” said Dong Liguan, an analyst at the National Bureau of Statistics.
“The risk of economic contraction still exists,” said economist Chuyue Zhang of the “Penpoint Asset Management” group, in a note, saying that “recent economic indicators send identical signals indicating a slowdown in the economy.”
The Asian giant’s exports fell in May by 7.5 percent year-on-year and manufacturing activity declined for the second month in a row.
To revive the economy, analysts expect interest rates to be cut.
“The government has not sent a clear signal on possible stimulus policy,” Zhang said. “I expect the next policy review to be in July, after the release of the second-quarter GDP figures,” he added.
China wants growth of “around 5 percent” this year, one of the weakest in decades.
But Premier Li Qiang warned that achieving this “will not be easy”.
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