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China's Consumer Inflation Stalls in May, as Factory-Gate Inflation Surges to Four-Year High
China's inflation data for May showed a disparity in the economy, with factory-gate prices surging to a nearly four-year high due to the global tech and AI boom, while consumer prices remained flat amid weak domestic spending.Consumer prices rose 1.2% year over year in May, remaining steady from the previous month, though lower than the 1.3% consensus forecast tracked by Investing.com.According to the National Bureau of Statistics on Wednesday, food, tobacco, alcohol and restaurant prices slipped 0.9% during the month, dragged down by pork prices which plunged 16.1%.In contrast, gasoline prices increased 23.5% year over year.O a month-on-month basis, consumer prices were down 0.1%, reversing the 0.3% growth the previous month.Core inflation, which excludes volatile food and energy prices, rose 1.1% year over year, easing from 1.2% in April.Meanwhile, China's factory-gate inflation showed a different picture as annual producer inflation accelerated to 3.9% in May, hitting its highest level in nearly four years.The latest print was in line with the consensus forecast of 3.9%, tracked by Investing.com, and compared with 2.8% recorded in the previous month.On a month-over-month basis, China's producer price index rose 0.5%, easing from the 1.7% increase between March and April.The prices of means of production jumped 5.2% year over year, with mining producer prices surging 15.8%, while that of the raw materials sector increased 9.2% and processing grew 2.3%.Fuel and power producer prices increased 10%, while that of non-ferrous materials soared 22% and chemical raw materials grew 11.8%.Ex-factory prices of non-ferrous metal mining and beneficiation or raw material treatment increased 36.5%."Accelerated electrification, deep integration of artificial intelligence with various fields, and increased demand for computing power also drove up prices in non-ferrous metals, electrical machinery, and computer-related industries," NBS statistician Dong Lijuan said in a statement.ING Think's Greater China Chief Economist Lynn Song said the latest data suggested that "the reflation trend is solidifying.""We're not expecting major momentum on this front this year," said Song. "This is especially the case as we still see elevated youth unemployment numbers, and many workers are more concerned about keeping their jobs amid AI advancements."
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