China's consumer price index up 1.3% in May

Updated:Jun 09,2021 15:15 PM

China's consumer price index, a main gauge of inflation, grew by 1.3 percent year-on-year last month, up from 0.9 percent in April, the National Bureau of Statistics said on Wednesday.

The CPI reading picked up as food prices rose amid a tight supply of freshwater fish and eggs while non-food prices increased with transportation costs elevated by rising international crude oil prices, the NBS said.

The growth in core CPI, which excludes volatile food and energy prices and is deemed as a better gauge of demand-supply relationship, came in at 0.9 percent in May, up from 0.7 percent in the previous month.

Dong Lijuan, a senior NBS statistician, said the situation of consumer prices has kept "generally stable" in May with supply secured.

Meanwhile, China's producer price index, which gauges factory-gate prices, rose by 9 percent year-on-year last month, up from 6.8 percent in April and marking the highest level in nearly 13 years.

The bureau said industrial goods prices have continued to rise due to surging commodity prices in the global market and recovering domestic demand, with sectors like oil extraction and metal smelting leading the growth.

Zhu Haibin, JPMorgan's chief China economist, said inflationary pressure in China will gradually mitigate as global commodity prices are close to peak, though remaining uncertainty and possible volatility may complicate the process.

International commodity prices are likely to peak in the current quarter and move lower moderately later this year, Zhu said, given that a gradually stabilized global pandemic situation will facilitate supply-side recovery and alleviate the demand-supply imbalance in the commodities sector.

With the rise in commodity prices to lose some steam, China's full-year year-on-year growth in CPI may average at about 1.5 percent, lower than the government's expected goal of about 3 percent. The full-year core CPI growth may stand at about 1 percent, according to him.

It is unlikely for the People's Bank of China, the central bank, to raise interest rate against a mild consumer inflation prospect, Zhu said, adding that the policy rate is expected to stay unchanged for the rest of the year.