China’s consumer prices experienced a decline for the fourth consecutive month in May, revealing ongoing deflationary pressures primarily attributed to weak demand and tensions in trade relations with the United States. This situation has exacerbated the inventory challenges faced by manufacturers.
Data released by the National Bureau of Statistics on Monday indicated that the national consumer price index (CPI), an essential measure of inflation, dropped by 0.1 percent year-on-year last month. This figure surpassed market expectations, where a forecast by financial provider Wind predicted a 0.17 percent decline. In April, the CPI also posted a 0.1 percent year-on-year decrease.
Dong Lijuan, the chief statistician of the bureau, noted efforts by China to enhance consumption through more robust and targeted measures. She highlighted that the development of new quality productive forces is gaining momentum and some sectors are witnessing improved supply-demand dynamics, which is contributing to positive price fluctuations.
Additionally, the May CPI indicated a 0.2 percent reduction from April’s numbers, primarily driven by declining energy prices. As China continues to deal with significant deflationary risks linked to subdued domestic demand and an oversupply in some markets, uncertainties surrounding trade exacerbate challenges in managing excess inventory. Notably, a new round of trade discussions between China and the United States is scheduled to occur in London on Monday, which may bring opportunities for negotiation and potential resolutions.
Looking ahead, there is cautious optimism that enhanced collaboration in trade could alleviate some pressures faced by consumers and manufacturers alike, fostering a more stable economic environment.