China’s consumer prices see May uptick as oil shock inflates factory-gate costs

China’s consumer inflation rose modestly in May, with the National Bureau of Statistics reporting a 1.2% year-on-year increase in the consumer price index (CPI). This matched April’s rate but fell short of the 1.4% gain expected by economists surveyed by Wind Information. On a monthly basis, the CPI declined by 0.1%, signaling persistent softness in household spending despite government stimulus measures. The producer price index (PPI), which tracks factory-gate costs, climbed 3.9% year-on-year, exceeding both the Wind forecast of 3.5% and April’s 2.8% rise. The surge was attributed to global oil price shocks stemming from the US-Israel conflict in Iran, which helped offset some deflationary pressures. The data underscores China’s uneven economic recovery, with weak domestic demand contrasting with rising production costs. Authorities have introduced policies like a nationwide trade-in program for consumer goods, extended to 2026, to revive spending. However, fierce competition in certain industries continues to weigh on price stability. Economists note the CPI’s sluggishness reflects lingering consumer caution, while the PPI’s sharp rebound highlights supply-side pressures. The divergence between CPI and PPI suggests policymakers must balance cost controls with demand-side support to sustain growth.