Chinese inflation slows further

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/24

​The 12-month rise in consumer prices slowed from 1.5 % in April to 1.2 % in May. The slowdown largely reflects the decline in food prices in recent months. Consumer price inflation for non-food goods and services, however, remained largely unchanged in April and May. May producer prices slid 4.6 % y-o-y. Chinese producer price have fallen since spring 2012, evidencing struggles with structural issues like overcapacity.
 
According to both official and private data sources, the drop in apartment prices on housing markets has ceased and prices may actually have started to rise a bit in most cities. Stock markets, on the other hand, face the risk of a price bubble due to market participants buying shares on margin. The overall trend in prices does not indicate a risk of deflation that would require easing of monetary policy.

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