Consumer price index rises 1.5% y-o-y in May

China’s consumer price index (CPI), a main gauge of inflation, rose 1.5 percent year-onyear in May, data from the National Bureau of Statistics (NBS) showed on Friday.

The May inflation rate was higher than April’s 1.2 percent. On a monthly basis, the CPI declined 0.1 percent.

The NBS attributed the slightly lower CPI reading on a monthly basis to the food prices, which fell by 0.7 percent in May. According to a Friday NBS statement, the prices of fresh vegetables fell by 6.2 percent while the prices of eggs fell by 4.1 percent and that of pork by 2.9 percent.

The decline in the cost of air travel and gasoline also contributed to the drop in inflation last month.

Prices of non-food items saw an increase of 2.3 percent year-on-year. The cost of education, educational services and transportation also rose dramatically.

Some market insiders believe that the CPI will gradually edge up and linger around 2 percent by the end of this year. But Liu Xuezhi, a senior analyst at Bank of Communications, said that such worries are unfounded.

“The CPI level in May is very stable. In the second half of this year, the economic momentum won’t be very strong, and financial manage- ment would be tightened, so I don’t think there will be much stimulus for price surges,” Liu told the Global Times Friday.

China’s producer price index (PPI), which measures the price changes for major commodities used by manufacturers at the wholesale level, rose 5.5 percent year-on-year in May. The pace slowed from the 6.4 percent registered in April.

According to Liu, the PPI has been surging too fast in the past year, which has resulted in an imbalanced structure in that the upstream industries are rising too fast. “Now the PPI has dropped back to a normal level, which is a positive development,” he noted.

China’s economy showed signs of recovery in the second half of 2016, but international organizations are still worried about the vitality of the domestic economy. Global rating agency Moody’s, for example, forecasted in a recent report that China’s annual economic growth will slow to 5 percent in the next five years.

“The economic recovery has been quite strong, it should be easy for China to achieve a GDP growth of about 6.5 percent this year,” Liu said. “In the long run, the domestic economy will possibly edge down due to economic transition, but it won’t slide too rapidly.”