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Trang chủ » May sees a decrease in inflation as shown by CPI and PPI

May sees a decrease in inflation as shown by CPI and PPI

Inflation cools in May, CPI and PPI shows

Inflation cools in May, CPI and PPI shows

China’s low inflation fueled hopes for a sustained recovery as the country’s consumer price index (CPI) only rose 0.2% year-on-year (YoY) in May. This was lower than the 0.3% increase expected by economists surveyed by Reuters and also lower than April’s 0.1% YoY increase. Month-on-month, prices even fell 0.2%, while economists expected a fall of 0.1%. Deflation in producer prices remained, as the producer price index fell 4.6% YoY in May after a 3.6% drop in April. Policymakers seem to take note of the “consistent signals that the economy is cooling”: the central bank is expected to stick to its wait-and-see attitude before taking any policy measures while Wang Tao, chief China economist at UBS AG in Hong Kong, said that “with demand staying weak, there’s not much upside for prices to go up”.

People walk past buildings in Shanghai, Shanghai, China, on Friday, April 21, 2023.

Bloomberg | Bloomberg | Getty Images

China’s low CPI and deflation in producer prices contrast with growing inflation in major economies around the world. Global central banks, including the US Federal Reserve, have been fighting to bring down rising prices for more than a year. Just this week, Canada and Australia raised interest rates to counter inflation.

FAQs

  • What is inflation in China?

Inflation in China remained low in May, as the CPI only rose 0.2% YoY, lower than expected by economists and last month’s figure.

  • What is deflation in producer prices?

Deflation in producer prices means that the prices of goods and services businesses receive for their products are falling YoY.

  • Why do policymakers seem to take note of China’s cooling economy?

The economy’s performance in the second quarter could influence China’s policy approach, with negative economic indicators pointing to a cooling economy.

Inflation cools in May, CPI and PPI shows
Inflation cools in May, CPI and PPI shows

May sees a decrease in inflation as reflected in CPI and PPI

China’s struggle to recover from the pandemic is reflected in its low inflation rates, as its consumer price index (CPI) rose 0.2% YoY in May, lower than the 0.3% predicted by economists, and a marginal increase from April’s two-year low of 0.1%. Meanwhile, the producer price index fell 4.6% in May, the steepest YoY drop in seven years. In contrast, major economies around the world are experiencing relatively high inflation rates. Canada and Australia recently raised their interest rates, whereas global central banks, including the US Federal Reserve, have been fighting the issue for over a year. The latest economic data from China is among indicators pointing to a cooling economy. According to Pinpoint Asset Management’s Zhiwei Zhang, recent indicators suggest a deflationary risk that is still weighing on the Chinese economy. The onshore yuan dropped 0.06% after the release of the data and the CSI 300 Index shed 0.2%. The Chinese government’s next fiscal policy review is anticipated after the release of its second-quarter GDP next month.

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