Singapore
This article was added by the user . TheWorldNews is not responsible for the content of the platform.

China’s inflation stays near zero as economic recovery stalls

China’s consumer prices increased only slightly in May while factory-gate prices continued to contract, a sign of weak demand in the economy. PHOTO: AFP

BEIJING - China’s consumer prices increased only slightly in May while factory-gate prices continued to contract, a sign of weak demand in the economy and a worsening environment for businesses.

The consumer price index rose 0.2 per cent last month from a year earlier, the National Bureau of Statistics said on Friday, in line with forecasts and up from 0.1 per cent in April. Core inflation, which excludes volatile food and energy costs, slowed to 0.6 per cent from 0.7 per cent.

Producer prices declined 4.6 per cent in May, compared with a 3.6 per cent fall in the previous month, as commodity prices eased and domestic and foreign demand weakened. Economists had expected a 4.3 per cent decrease.

The inflation data provide fresh evidence that the world’s second-largest economy cooled further in May, coming on the back of recent reports showing manufacturing activity contracted, exports shrank for the first time in three months and a rebound in the housing market has faded.

Speculation is growing that the People’s Bank of China (PBOC) will cut the interest rate on its one-year loans, possibly as early as next week, to help bolster growth and lift business and consumer confidence. Several major state-owned banks lowered rates on a range of deposit products on Thursday, which some analysts said could pave the way for lower lending rates.

The PBOC has kept the rate on its one-year medium-term lending facility unchanged since September, relying instead on other tools, such as targeted loans, to support sectors like small businesses. BLOOMBERG