China's Inflation Rises On Food Prices, Factory Gate Inflation Slows

China's consumer price inflation accelerated on food prices in May, while factory gate inflation slowed on weak commodity demand, data from National Bureau of Statistics showed Wednesday.

Consumer prices advanced 2.7 percent year-on-year in May, after gaining 2.5 percent in April. The rate was the fastest in more than a year and came in line with expectations.

Food prices inflation climbed to 7.7 percent from 6.1 percent a month ago. Fruit prices surged 26.7 percent and pork prices increased 18.2 percent due to the disruptions caused by African swine flu.

Meanwhile, non-food inflation slowed slightly to 1.6 percent from 1.7 percent.

On a monthly basis, consumer prices remained unchanged in May.

On the other hand, producer price inflation eased to 0.6 percent in May, as expected, from 0.9 percent in April. The decrease was largely due to the fall in manufactured industrial input prices.

Month-on-month, producer prices gained 0.2 percent, following a 0.3 percent rise.

The recent pick-up in headline inflation should not be interpreted a sign that domestic price pressures are building, Shilan Shah and Franziska Palmas, economists at Capital Economics, said.

Instead, the weakness of both core CPI and PPI inflation suggests that demand remains lackluster, the economists noted. With economic growth unlikely to stage a strong recovery and industrial commodity prices likely to remain subdued, economists don't expect much upside to PPI and non-food CPI.

Economic News