(Bloomberg) -- China’s inflation pressure continued rising in May, as supply shocks pushed up food costs.
- The consumer price index rose 2.7% last month from a year earlier, while factory prices gained 0.6%, according to the National Bureau of Statistics. That’s the same as forecast by economists in a Bloomberg survey in both cases
Key Insights
- Pork prices rose 18.2% from a year earlier, vegetable prices rose 13.3% and fruit prices rose 26.7% in May. NBS data also showed consumer prices were unchanged from April, indicating stabilizing inflation pressures
- Food prices rose 7.7% from a year ago, contributing to 1.48 percentage points to the CPI growth, according to a statement from the NBS
- “The surge of fruit and egg prices is short-lived and could subside in summer when supply increases’’ although pork prices could rise further due to African Swine Fever, said Lu Ting, chief China economist at Nomura Holdings Inc. in Hong Kong. “We expect headline year-on-year CPI inflation to breach above 3% in some months this year, but it may impose little pressure on the PBOC’s easing bias.’’
- The rise in producer prices slowed to 0.2% from April, with prices falling in 11 of 40 industrial sectors and rising in 21
- The slower PPI means that manufacturing activities are still growing very slowly and that could derail economic growth if there’s an escalation of trade tensions, according to Iris Pang, an economist at ING Bank N.V. in Hong Kong. “I expect more fiscal stimulus in the form of infrastructure to boost raw material manufacturing.”
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or
remove ads
.
Get More
- See table for breakdown of price changes
- “It is important for the PPI to hold up” as deflationary risks are a real threat to the industrial economy and could easily drag China into a negative spiral, said Raymond Yeung, chief China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “The recent down turn of oil prices will still create downward pressure on PPI. This risk is no less than the trade war.”