China's consumer inflation stalls even as factory prices surge to a three-year high
China's National Bureau of Statistics said consumer inflation came in at 0.1% in May, below expectations, while producer prices jumped 3.2%, hitting a three-year high on energy and metals costs. The yuan slipped against the dollar after the data. The PBoC is expected to announce additional short-term liquidity measures.
China's National Bureau of Statistics (NBS) said consumer inflation rose 0.1% year-on-year in May, below the market consensus of 0.3%. Core inflation held steady at 0.7%. Declines in pork and fresh-fruit prices reflected continuing weakness in household spending.
The producer price index (PPI) jumped 3.2%, its highest reading since March 2023, with oil and metals costs the main driver. Sustained AI-hardware demand pushed prices in subcategories such as photonic components and specialty alloys up by as much as 5.5%. Economists at Beijing-based China International Capital Corp wrote that the gap between demand and input prices was likely to squeeze industrial margins in the medium term.
The onshore yuan (CNY) slid 0.2% to 7.23 per dollar. The China Banking and Insurance Regulatory Commission (CBIRC) said additional liquidity measures were under consideration to support retail-credit growth. Asian equities traded mixed, with the Hang Seng Tech Index up 0.9%. U.S. futures opened flat. Not investment advice.
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