China: Inflation jumps to over one-year high in May
June 12, 2019
Consumer prices were flat from the previous month in May, following April’s 0.1% increase. The reading mostly reflected that higher prices for food and clothing and footwear were offset by lower prices for recreation, education and cultural services.
Inflation rose from April’s 2.5% to 2.7% in May. The print represented the highest reading in 15 months and was in line with the result that market analysts had expected. Annual average inflation inched up from April’s 2.1% to 2.2% in May.
Regarding the recent upward trend in inflation, Ting Lu, Lisheng Wang and Jing Wang, economists at Nomura, comment that:
“We believe the surge in fruit and egg prices will be short-lived and could subside in summer when supply increases, while pork prices could rise further due to a sharp decline in hog stock as a result of the spread of African Swine Fever (ASF).”
Producer price inflation (PPI), meanwhile, fell from April’s 0.9% to 0.4% in May. The reading was below market analysts’ expectations of 0.6%.
China Inflation Forecast
FocusEconomics Consensus Forecast participants expect that consumer inflation will average 2.2% in 2019, which is unchanged from last month’s estimate. In 2020, the panel also sees consumer inflation at 2.2%. Meanwhile, the panel expects producer inflation to be 1.7% in 2019, which is down 0.4 percentage points from last month’s projection. In 2020, panelists also see producer inflation at 1.7%.