China Inflation Rate Hits 15-Month High in May


China's consumer price inflation rose to 2.7 percent year-on-year in May 2019 from 2.5 percent in the previous month and matching market consensus. It was the highest inflation rate since February last year, as food cost increased the most since January 2012, with pork prices being persistently high following an outbreak of African swine fever.

The politically sensitive food inflation jumped to a near 7-1/2-year high of 7.7 percent in May from 6.1 percent in April, as prices of pork surged 18.2 percent, the third straight month of increase in over two years, after a 14.4 percent gain in April. In addition, prices increased further for both fresh fruit (26.7 percent vs 11.9 percent) and eggs (8.7 percent vs 3.7 percent), while slowed for fresh vegetables (13.3 percent vs 17.4 percent), and was flat for edible oil (vs -0.3 percent in April).

Non-food price inflation came in at 1.6 percent in May, little-changed from the prior's month 1.7 percent. Prices rose at softer pace for clothing (1.7 percent vs 1.8 percent); rent, fuel & utilities (1.8 percent vs 2 percent); household goods & services (1 percent vs 1.1 percent); and healthcare (2.5 percent vs 2.6 percent). Also, transport & communication prices fell 0.9 percent, after a 0.5 percent drop in April. Meanwhile, cost rose faster for both other goods & services (2.1 percent vs 1.9 percent) and education, culture & recreation (2.6 percent vs 2.5 percent). 

Annual core inflation, which strips out volatile food and energy prices, edged down to 1.6 percent in May, the lowest since August 2016, from 1.7 percent in April.

On a monthly basis, consumer prices were unchanged in May, after a 0.1 percent gain in April, in line with expectations.

Meanwhile, China's producer price index increased by 0.6 percent from a year earlier in May, slowing from a 0.9 percent rise in the previous month and matching market expectations. Prices of means of production eased (0.6 percent vs 0.9 percent), namely processing (0.5 percent vs 0.9 percent), with prices of raw materials falling (-0.6 percent vs a flat reading) while cost of extraction went up further (6.1 percent vs 5.3 percent). On the other hand, consumer goods inflation was steady (at 0.9 percent), as cost of food production (2.2 percent vs 1.9 percent) and daily use goods (0.4 percent vs 0.3 percent) offset a slowdown in cost of clothing (1.5 percent vs 1.7 percent), while prices of durable goods fell at a faster pace (-0.8 percent vs -0.6 percent). On a monthly basis, producer prices rose 0.2 percent in May, following a 0.3 percent gain in April.

China Inflation Rate Hits 15-Month High in May


Statistics China | Rida Husna | rida@tradingeconomics.com
6/12/2019 8:22:02 AM