China’s consumer prices dropped for the fourth consecutive month in May, reflecting ongoing deflation concerns as domestic demand remains weak. The consumer price index fell by 0.1% compared to the previous year, according to data from the National Bureau of Statistics. This decline was slightly less than the 0.2% drop predicted by analysts. Core inflation, excluding food and energy, rose by 0.6% in May, marking its highest level since January. Meanwhile, deflation in producer prices deepened, falling by 3.3% year-on-year. A price war in the automotive sector has contributed to the downward pressure on prices. Policymakers have urged the industry to cease these price wars, which have negatively impacted business profitability. Although exports remain strong, China ultimately needs to boost domestic demand to combat deflation. In response to economic challenges, Chinese financial regulators implemented policy measures in May, including cutting key interest rates and lowering the reserve requirement ratio for banks. Trade tensions with the U.S. have eased somewhat following a preliminary deal in Geneva, but uncertainties persist as both sides prepare for renewed trade talks. Markets are closely watching whether China will introduce further monetary easing measures to support the economy. — new from CNBC
