China on fourth month of deflation in May, CPI down 1.4%

10 June 2009 10:40  [Source: ICIS news]

GUANGZHOU (ICIS news)--China recorded its fourth month of deflation, with its consumer price index (CPI) in May falling 1.4% year on year and down 0.3% month on month, data from the National Bureau of Statistics (NBS) showed on Wednesday.

Its producer price index (PPI), a measure of wholesale prices, also fell 7.2% year on year, extending its decline for the sixth month in May.

Food prices, which represent a third of the CPI basket, dropped 0.6% year on year led by pork prices, which declined 32%. There was an oversupply of pork amid concerns about the A/H1N1 virus, which was popularly known as swine flu, according to state media.

The country's core CPI, which excludes food and energy prices, also slipped 1.3%, official data showed.

"The [CPI] figures met market expectations and the PPI [was] actually better than expected,” said brokerage analyst, who declined to be named.

The indices may start turning positive towards the fourth quarter, with CPI turning around faster than PPI, he said.  

China has an inflation target of 4% for this year.

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By: Fanny Zhang
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