China producer prices drop to lowest since 2016

MADRID, 9 Jun.

China producer prices drop to lowest since 2016


China's industrial producer price index registered a year-on-year drop of 4.6% last May, compared with the 3.6% decline seen in April, representing the largest drop in industrial prices in the year. country since May 2016, according to data published by the National Statistics Office (ONE).

For its part, the year-on-year inflation rate in China stood at 0.2%, which represents an increase of one tenth compared to the 0.1% rise in prices in April.

The core inflation rate, which excludes the impact of energy and fresh food price volatility, slowed, however, to 0.6% from 0.7%.

In monthly data, the Chinese inflation rate recorded a decline of 0.2% in the fifth month of the year in relation to the month of April, when it had fallen 0.1% per month.

In May, the prices of food, tobacco and alcohol rose 1.2% year-on-year, including a 3.4% rise in the price of fruit and a 0.5% rise in cereals, while fresh vegetables they fell 1.7%, eggs 1.5% and meat 1%.

"Producer price deflation deepened further last month and, despite rising consumer price inflation, it remained subdued while core inflation fell slightly, suggesting that the immediate inflationary impact of reopening was slowing down," said Julian Evabs-Pritchard, senior China economist at Capital Economics.

"We continue to think a tighter labor market will put upward pressure on services inflation in the coming months. But the government's ceiling of around 3% is unlikely to be tested and we doubt inflation will become a barrier to further political support," the expert added.