China’s consumer prices fall for fourth month amid weak demand, trade tensions

China’s consumer prices declined for a fourth straight month in May, highlighting persistent deflationary pressures driven by sluggish demand and trade tensions with the United States, which are compounding inventory strains for manufacturers.

The national consumer price index (CPI), a key gauge of inflation, fell 0.1 per cent year on year last month, according to data released by the National Bureau of Statistics on Monday.

The figure beat market expectations after a poll by financial provider Wind forecasted a 0.17 per cent drop. In April, the CPI saw a 0.1 per cent year-on-year decline.

“China is boosting consumption with greater intensity and more precise measures. New quality productive forces are growing stronger, and supply-demand relationships in some sectors have improved, leading to positive price changes,” said Dong Lijuan, chief statistician of the bureau.

China’s CPI in May also marked a 0.2 per cent contraction from April. Dong said that a decline in energy prices was the main cause of the drop.

China is grappling with persistent deflationary risks due to sluggish domestic demand and oversupply, while uncertainty over trade continues to cloud suppliers’ ability to clear excess inventory, adding to deflationary pressures. A new round of trade talks between China and the United States is set to take place in London on Monday.