Chinese consumer prices fall again as export growth slows

(Sharecast News) - Consumer prices in China declined year-on-year for the fourth straight month on the back of weak domestic demand and falling prices, while export growth slowed as a result of the country's ongoing trade war with the US. The annual rate of Chinese deflation held steady at -0.1% last month, though slightly above the -0.2% consensus forecast.

Food price deflation accelerated to -0.4% from -0.2%, while transport prices fell 4.3% after dropping 3.9% the previous month. That was enough to offset increased prices across housing, clothing, healthcare and education.

Core inflation, which strips out food and fuel costs, rose to 0.6% year-on-year from 0.5% previously, hitting its highest rate since January.

At the same time, producer price deflation picked up to -3.3% in May, up from -2.7% in April, marking the sharpest decline in wholesale prices since July 2023.

In other news, Chinese exports rose by just 4.8% year-on-year in May, down from 8.1% growth in April, with shipments to the US tanking 34.5% - the sharpest decline in more than five years.

Imports, meanwhile, fell at an annual rate of 3.4%, after slipping 0.2% the previous month.

"Chinese equities opened the week on a mildly positive note, supported by hopes that weak macro data will prompt further stimulus from the People's Bank of China (PBoC) and the government, and that the second round of US-China trade talks - today in London - could lead to further progress," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.