BEIJING: China’s inflation eased to 2.1 percent year-on-year in May from 2.4 percent in April, official data showed, with analysts citing a steep fall in vegetable prices as the biggest factor leading the decline.
The consumer price index — a main gauge of inflation — decreased 0.6 percent month-on-month last month, compared with a gain of 0.2 percent in the previous month, the National Bureau of Statistics (NBS) said in a statement.
The year-on-year figure for May compared with a forecast of a 2.5 percent increase in a median forecast of more than a dozen economists surveyed by Dow Jones Newswires.
A drop of 13.8 percent month-on-month in vegetable prices during May was the single biggest factor leading the decline, Yu Qiumei, a senior analyst at the NBS, said in a statement.
China, the world’s second-largest economy, has set its inflation target for this year at 3.5 percent, higher than the actual inflation rate 2.6 percent last year. Inflation hit a 10-month high of 3.2 percent in February.
Producer prices — which measure the costs of goods as they leave factories, and are seen as a leading indicator of price trends — fell 2.9 percent compared with a drop of 2.6 percent in April, the NBS said.
Analysts had expected China’s economy, which grew at its slowest pace in 13 years in 2012, to experience a pick-up this year, though figures so far have been disappointing.
On Saturday, China reported a sharp slowdown in exports in May from April, while imports unexpectedly dropped, amid weakness in the domestic economy and sluggish demand overseas.
In April, the government announced a surprisingly weak growth in gross domestic product (GDP) of 7.7 percent for the first quarter. That figure largely surprised analysts who had expected that growth was likely to accelerate in 2013 after showing strength at the end of last year.
Besides, the trade data for May, other recent indicators have raised alarm bells. A survey by British banking giant HSBC showed China’s manufacturing activity measured 49.2 in May, an eight-month low.
The government’s own survey of manufacturing activity for May, however, was more optimistic, unexpectedly rebounding to 50.8 from 50.6 the month before, according to the NBS.
The private and government purchasing managers’ index (PMI) surveys of manufacturing are widely watched indicators of the health of the Chinese economy. Readings above 50 indicate expansion while anything below points to contraction.