China’s consumer prices stable, factory prices eased

BEIJING: Inflation in China cooled in May, with consumer prices growing at the same rate as those in April, while the increase in factory-gate prices slowed to 6.4 percent as measures to ensure supply took effect.

Data from the country’s National Bureau of Statistics (NBS) showed last Friday that the consumer price index (CPI) jumped 2.1 percent year on year last month. Month on month, the index fell 0.2 percent, compared to April’s 0.4-percent uptick.

Food prices reversed the 0.9-percent gain in April to fall 1.3 percent month on month, weighed down by the 15-percent drop in the prices of fresh vegetables after market supply and logistics were improved.

Prices of pork, a staple meat in China, dived 21.1 percent year on year, but climbed 5.2 percent month on month. Hog production has gradually tempered while the stockpiling of pork to replenish state reserves continues, NBS senior statistician Dong Lijuan said.

Prices of flour, grain products and plant-based oils grew 0.8 percent, 0.8 percent and 0.7 percent, respectively, in May from the fourth month, driven by global food price hikes.

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Prices of gasoline, diesel and liquefied petroleum gas surged by 27.6 percent, 30.1 percent, and 26.9 percent year on year, respectively.

Core CPI, which excludes food and energy prices, gained 0.9 percent year on year last month, unchanged from April.

The producer price index (PPI), which measures costs for goods at the factory gate, rose 6.4 percent year on year in May.

This figure moderated from the 8-percent annual increase in April. Month on month, the PPI gained 0.1 percent, lower than April’s 0.6-percent increase.

These data come after China has vowed to leave no single grain unharvested during this year’s summer harvest and keep the supply of coal-fired power stable to keep prices steady. As of early last week, the country’s farmers have harvested about 55 percent of its winter wheat, beating last year’s halfway date by two days.

To further ensure energy security, Beijing plans to launch a number of new wind, solar and coal-fired power projects this year and enhance storage for resources like coal and crude oil.

Dong said the PPI’s monthly and annual growth rates continued to narrow, thanks to the government’s effective coordination of Covid-19 outbreak control, economic and social development, and measures to ensure smooth and stable industrial and supply chains.

In June and beyond, analysts warn of the potential impact on prices, including from sporadic resurgences in Covid-19 infections, regional extreme weather conditions, and high global fuel and raw material costs.

The CPI could stay flat or dip in June while the PPI may ease further at a slower rate, squeezing the gap between consumer and factory-gate prices, said Deng Zhichao, an analyst at Zhixin Investment Research Institute.