China’s headline CPI stayed in negative territory for the fourth consecutive month in May, coming in at -0.1% yoy, slightly better than the expected -0.2% yoy.
The persistent softness in overall inflation was largely driven by a sharp -6.1% yoy decline in energy prices, which alone shaved off nearly half a percentage point from the annual CPI reading.
On a monthly basis, CPI fell -0.2% mom, with energy again dragging down the figure through a -1.7% mom decline.
In contrast, core inflation, which strips out food and energy prices, rose to 0.6% yoy, the highest level since January.
Producer price pressures continue to weaken further, with PPI dropping to -3.3% yoy from -2.7% yoy previously, marking the deepest contraction in nearly two years. Wholesale prices have now been stuck in deflation since October 2022.
