China CPI inflation disappoints in May, PPI shrinks at slower pace

China CPI inflation disappoints in May, PPI shrinks at slower pace– Chinese consumer price index inflation grew less than expected in May as consumption remained largely languid in the face of an uncertain economic recovery.

But producer price index inflation shrank at a slower-than-expected pace- marking its smallest contraction since February 2023 amid signs of a sustained recovery in the industrial sector.

CPI rose 0.3% year-on-year in May, data from the National Bureau of Statistics showed on Wednesday. The reading was weaker than expectations for a rise of 0.4% and remained unchanged from the prior month.

Month-on-month CPI inflation shrank 0.1%, compared to expectations that it would remain unchanged from May.

The reading comes as Chinese consumer spending remained largely under pressure from persistent concerns over the Chinese economy, which saw consumers drastically scale back discretionary spending over the past year.

Still, the reading showed that China had at least remained out of negative inflation territory, amid continued stimulus efforts from Beijing.

But an improvement in China’s manufacturing sector was reflected in an improved factory gate inflation reading, as industrial production picked up on sustained overseas demand.

PPI inflation shrank 1.4% year-on-year in May, compared to expectations for a drop of 1.5%. The reading also improved drastically from the 2.5% drop seen in the prior month.

China’s massive industrial sector has improved steadily in recent months, amid consistent policy support and as overseas demand remained robust despite increased economic headwinds.

But the industrial sector only represents one aspect of the world’s second-largest economy, with sustained weakness in consumer spending presenting a mixed economic outlook.

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