China’s consumer price index (CPI) eased to 1.2% year-on-year in May, compared with 1.5% in the prior month, as food prices declined in the month, according to data released by China’s National Bureau of Statistics.
On a monthly basis, the CPI dropped by 0.2%, indicating that domestic demand remains lukewarm.
Producer price index (PPI) inflation fell 4.6% in May, unchanged from last month.
"We believe that further monetary policy easing is highly needed. While market interest rates declined to the lowest level since 2009…the costs of funds faced by Chinese corporates remained elevated, especially as corporate profits continued to deteriorate," says a research report by ANZ.