Global Courant
People walk past buildings in Shanghai, Shanghai, China, on Friday, April 21, 2023.
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Inflation in China remained subdued in May as the economy struggles to recover even after strict Covid lockdown measures were lifted late last year.
The producer price index fell by 4.6% in May, compared to a fall of 3.6% in April. A Reuters poll found that economists expected a 4.3% fall in producer prices.
The reading marked the strongest year-on-year decline in seven years, as producer prices saw a 7.2% year-on-year decline in May 2016.
China’s consumer price index rose 0.2% in May from a year ago, government data showed. Economists polled by Reuters expected an increase of 0.3%. The CPI reached a two-year low of 0.1% in April.
Month-on-month, prices fell 0.2% — economists predicted a 0.1% decline.
China’s low consumer inflation and producer price deflation contrast with relatively high inflation in major economies around the world.
Global central banks, including the US Federal Reserve, have been fighting for more than a year to bring down rising prices. This week Canada and Australia defied expectations and raised interest rates.
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After release, the Chinese yuan on land then weakened by 0.06% to 7.1154 against the US dollar. The CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, lost 0.2% and was last slightly above the flatline.
The latest data is one of a series of economic indicators pointing to a cooling economy in China.
Pinpoint Asset Management’s Zhiwei Zhang said: “The risk of deflation is still weighing on the economy. Recent economic indicators are consistently signaling that the economy is cooling.”
Zhang expects the next review of the Chinese government’s fiscal policy to take place after the second-quarter gross domestic product is released next month.
This is a breaking news story. Check back later for updates
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