China: Inflation continues to moderate in May
June 11, 2012
In May, consumer prices added 3.0% over the same month last year, which was below both the 3.4% increase registered in April and the 3.2% rise expected by the market. Owing to the softer rise, annual average inflation edged down from 4.9% in April to 4.7% in May. The deceleration observed in May was mainly due to lower inflation for food, which moderated from 7.0% in April to 6.4% in May, as well as for transportation and communication. The producer price index fell 1.4% over the same month last year in May, following the 0.7% drop observed in April. The reading represents the lowest rate since November 2009, when the country last experienced producer price deflation. As a result, annual average producer price inflation slowed for a seventh month in a row, falling from April's 3.7% to 3.0%. Meanwhile on 8 June, the National Development and Reform Commission (NDRC) announced the second cut in fuel prices in a month due to lower crude costs. Prices will be reduced by 5.5% for gasoline and by 5.8% for diesel. The government expects inflation to average 4.0% this year.