China Inflation May 2022

Consumer prices dropped 0.20% over the previous month in May, contrasting April’s 0.40% rise. May’s result marked the weakest reading since December 2021. The reading was primarily due to decreasing prices for food. Moreover, prices for transportation and communication grew at a more subdued pace.

Consumer inflation held steady at April’s 2.1% in May. Meanwhile, producer price inflation fell to 6.4% in May, from April’s 8.0%.

Consumer price inflation is expected to trend up somewhat over the next few quarters but will likely stay mild by regional standards. Meanwhile, producer price inflation should continue to trend down on a base effect—given increasingly high producer price inflation readings as last year progressed—and as domestic supply difficulties ease.

Our panelists forecast that consumer inflation will average 2.2% in 2022, which is unchanged from last month’s estimate. In 2023, our panel sees inflation averaging 2.3%.

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