China inflation up for 4th month in row, but factory prices remain in negative | Key points

Consumer price index (CPI) or retail inflation in China increased for the fourth month in a row, as it grew 0.4% year-on-year in May, as per the data released by the country's National Bureau of Statistics on Wednesday, June 12.

The inflation rate in May stood higher than the estimate of 0.3%, as shared in a Reuters poll of economists.

The numbers remain unchanged as compared to April, when inflation stood at 0.4%. In March, it was recorded as 0.1%.

The rate of inflation entered into the positive trajectory only in 2024, after a protracted period of slump in prices due to the post-Covid slowdown.

The stringent curbs imposed by the Chinese government to restrict the spread of coronavirus had a ripple effect on its various economic sectors, with investor confidence and consumer spending nose-diving in 2022. The country's once-thriving property sector is yet to recover.

Deflation still drags factory prices

The factory-level prices or producer prices remain dragged by deflationary trends, even as the retail inflation has nascently recovered in 2024.

In May, the producer prices inflation stood at minus 1.4%. Although in the negative territory, the numbers mark an improvement as compared to the deflation of 2.5% recorded in April.

The decline in May was lower as compared to the deflation of 1.5% as estimated in the Reuters poll of economists.

After the inflation numbers were out, China's Hong Kong Hang Seng index opened 0.76% lower. The mainland Chinese CSI 300 also edged down marginally.