China Inflation


Inflation slows in May

In May, consumer prices increased 2.1% over the same month last year. The reading was below the 2.4% rise observed in April and undershot market expectations that had prices rising 2.5%. According to the statistical office, inflation moderated on the back of lower prices for food as well as for transportation and communication.

Meanwhile, in May, the producer price index fell 2.9% over the same month last year, which marks the lowest rate recorded since September 2012. The print was below the 2.6% drop seen in April and exceeded the 2.5% decline expected by market analysts. As a result of the monthly decrease, the annual average variation of the producer price index fell further from minus 2.3% in April to minus 2.5% in May.

Despite the annual slowdown, the trend in consumer prices stabilized, with annual average inflation remaining unchanged at April's 2.2%. The government expects that inflation will average 3.5% this year. FocusEconomics Consensus Forecast participants anticipate inflation to average 3.1% in 2013, which is down 0.2 percentage points from last month's estimate. In 2014, the panel sees inflation rising to 3.6%.

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China Inflation Chart

China Inflation May 2013

Note: Year-on-year and annual average variation of consumer price index in %.
Source: National Bureau of Statistics of China (NBS).

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