MNI BRIEF: China May Prices Likely In Check On Pandemic Curbs

China’s consumer prices seen accelerated only slightly in May as food prices were tamed by sufficient supply and services remained muted amid the pandemic lockdowns, while factory-gate inflation likely eased on the base effect and weaker demand, according to analysts.

The significant drop in vegetable prices offset the moderate price gains in pork, according to a report by China Minsheng Bank Research Institute. Fuel costs were lifted after the government hiked the gasoline and diesel prices twice in May, but services prices were restrained by Covid-19 curbs, the report said.

The producer price index would see a sharper deceleration in May on the lockdown and base effects, according to a report by China International Capital Corp. With the epidemic restricting construction, prices of ferrous metals and building materials continue to be pressured, the report added.

Median forecasts for Friday's prices data anticipated CPI rising 2.2% y/y, up from April’s 2.1% gain, while PPI was expected to have risen 6.5% y/y, decelerating from the previous 8.0%.