China consumer inflation slows in May

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The Labor Department said on Wednesday its consumer price index dipped 0.1% last month after plunging 0.8% in April, which was the largest decline since December 2008.

The domestic epidemic situation was generally stable in May, and businesses have resumed work, production and operation in an orderly manner.

The orderly restoration of work and production amid a generally stable COVID-19 situation helped moderate consumer inflation, according to Dong Lijuan, a senior statistician with the bureau. That was because goods deliveries were temporarily suspended amid the virus outbreak, and because of soaring prices of pork from African swine fever.

On a monthly basis, consumer prices went down 0.8 percent.

The continued drop in gasoline prices, which fell by 3.5 per cent, helped drive CPI lower, along with apparel, which dropped 2.3 per cent, and airlines fares, which fell 4.9 per cent.

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"This contradicted the rebound in global oil price inflation as global oil prices have been below the floor prices of US$40/bbl set by the National Development and Reform Commission since mid-March, and their recent rebound may not be fully translated into domestic retail prices of oil products", Lu said.

Citing the easing trend in CPI reading, Wen said the country is expected to reach the consumer inflation target of around 3.5 percent for the year 2020. The price of pork―a staple meat in China―rose 81.7 percent on-year last month, down from a 96.9-percent rise in April and 116.4 percent spike in March.

U.S. consumer prices dropped in May for the third straight month as the coronavirus pandemic pushed the American economy into a recession.

"We believe falling CPI inflation and continued PPI deflation will provide Beijing with more space to implement policy stimulus to offset the impact of Covid-19 on the economy", economists at Nomura International (Hong Kong) Ltd. wrote in a report.

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