CPI Photo: VCG

China's consumer price index (CPI) increased moderately in May, as consumer demand continued to recover, further shrugging off the market concerns about a deflation in China hyped by some in the foreign media.

The CPI jumped by a moderate 0.2 percent year-on-year in May, up from 0.1 percent growth in April, data from the National Bureau of Statistics (NBS) showed on Friday.

Food prices rose by 1.0 percent year-on-year in May, driving up CPI growth by about 0.19 percentage points, according to NBS data.

Poultry and meat prices rose 5.6 percent in May while edible oil prices were up by 3.6 percent. Following a rise in supply, pork prices dipped 3.2 percent in May from 4.0 percent growth in the previous month. Fresh vegetable prices fell 1.7 percent.

Service prices rose 0.9 percent year-on-year in May with the price of air tickets and travel up 14.7 percent and 8.0 percent respectively.

The May CPI data showed that consumer demand continued to recover and market conditions generally remained stable, NBS statistician Dong Lijuan said.

Zhou Maohua, an economist from Everbright Bank, told the Global Times on Friday that there is no deflationary trend within China's economy as inflation keeps rising and credit is maintaining rapid growth.

The current low-price environment matches the pace of recovery of domestic demand, helping to improve the welfare of middle- and low-income groups and will serve to enhance macro policy flexibility, Zhou noted.

Major international organizations are also expecting a strong economic recovery in China.

On Tuesday the World Bank revised China's growth for 2023 to 5.6 percent, compared to a 4.3 percent in previous forecast in January.

Economic activity in China bounced back in early 2023, spurred by a broad economic reopening, which bolstered consumer spending, including on service related activity, it said.

In a recent effort to further boost consumption, Chinese authorities on Friday announced a work plan to promote trade-in of electricity appliance and promote the intelligent and green smart home appliances to the rural areas.

Factory prices maintained a downward trend in May on weak external demand and a high base effect in the same period last year, according to Dong.

On a year-on-year basis, the Producer Price Index (PPI) fell 4.6 percent in May, widening 1.0 percentage point from the previous month.

Zhou attributed the fall in PPI to a drop in energy, raw materials and other commodity prices, which will help alleviate the production pressure across middle and downstream manufacturers.

Global Times