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China Inflation May 2019

China: Inflation jumps to over one-year high in May

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%.

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