MNI DATA IMPACT: China May CPI Hits 14-Month Low, PPI Weakens

     BEIJING (MNI) - China's May inflation slowed to 2.4% y/y from 3.3% in April

as food supplies improved on eased coronavirus restrictions and better weather.

The May result was the lowest level since March last year. Analysts had expected

2.5% y/y.

     Factory-gate prices extended falls to a more than four-year low due to the

high base in the same period last year.

     Here are key takeaways from data released by the National Bureau of

Statistics on Wednesday:

     - Food costs decelerated to 10.6% y/y from 14.8% in April, accounting for

2.15 percentage points of the CPI gain.

     - Pork prices, the main inflation driver in the past year, slowed to 81.7%

y/y from 96.9% in April, also driving down the gains in beef, mutton, chicken

and duck prices.

     - On a monthly basis, CPI fell 0.8%, compared with the 0.9% decline over

the previous month. 

     - The PPI was -3.7% y/y, further extending the 3.1% fall in April and

hitting the lowest level since March 2016. The figure was weaker than the

forecast of -3.2%.

     - The prices of oil and gas extraction, fuel processing as well as prices

in the chemical manufacturing sectors fell 57.6%, 24.4% and 9.2% y/y,

respectively, further extending the previous losses by 6.2, 4.6 and 0.9

percentage points, respectively.

     - The PPI was -0.4% m/m, compared to -1.3% in April-March, as industrial

production recovered on improved market demand. Price falls in oil-related

products narrowed on recovering crude oil prices.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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