Economic Watch: China's rising CPI points to domestic demand recovery

A consumer selects milk at a supermarket in Nanjing, capital of east China's Jiangsu Province, June 12, 2024.

China's consumer prices gained for the fourth straight month in May in the latest sign of a steady domestic demand recovery, official data showed Wednesday.

The consumer price index (CPI), a main gauge of inflation, was up 0.3 percent year on year last month, said the National Bureau of Statistics (NBS). (Photo by Su Yang/Xinhua)

BEIJING, June 12 (Xinhua) -- China's consumer prices gained for the fourth straight month in May in the latest sign of a steady domestic demand recovery, official data showed Wednesday.

The consumer price index (CPI), a main gauge of inflation, was up 0.3 percent year on year last month, said the National Bureau of Statistics (NBS). The core CPI, deducting food and energy prices, went up 0.6 percent to keep the upward trajectory.

"The consumer market continued its stable performance in May," NBS statistician Dong Lijuan said.

Non-food prices rose 0.8 percent year on year due in part to higher energy and service prices, while automobile prices fell amid fierce competition. Food prices declined 2 percent, narrowing from the 2.7-percent slip in April, dragged down by cheaper eggs, beef and mutton, but pork, freshwater fish and vegetables saw bigger price increases.

On a monthly basis, the CPI inched down 0.1 percent in May, softening from the 0.1-percent increase in April. But the decrease was smaller than the 0.2-percent drop on average in the same period of the recent 10 years.

The latest data suggested the consumer market recovery continued to gain traction, analysts said.

During the three-day Dragon Boat Festival holiday, which ended Monday, tourists spent 40.35 billion yuan (about 5.67 billion U.S. dollars), up 8.1 percent from the same period a year ago, according to the Ministry of Culture and Tourism.

Data from Meituan, a leading e-commerce platform, showed daily online service deals, such as food delivery and meal coupon purchases, jumped 69 percent during the holiday from the pre-pandemic corresponding time in 2019, adding to evidence of warming consumer sentiment.

The government has also intensified policies to boost domestic demand and bolster the economy.

China in March initiated a new round of large-scale equipment upgrades and trade-ins of consumer goods, which is expected to create consumption demand worth more than 1 trillion yuan. Thanks to more subsidies and discounts, the consumer market got a boost from robust sales of home appliances and new energy vehicles, among others.

NBS spokesperson Liu Aihua said last month at a press conference that with the renewal program the country's price level will remain stable and rise mildly in the rest of the year.

Wu Chaoming, vice head of Chasing International Economic Institute, predicted the CPI uptick will be seen in the fourth quarter of the year when the supportive policies deliver greater effects and domestic demand further improves.

The NBS data showed the country's producer price index, which measures costs for goods at the factory gate, saw a significant narrowing in its year-on-year decline in May, with a drop of 1.4 percent compared to a 2.5-percent decrease in the previous month.

Rising international commodity prices and improved supply-demand conditions in the domestic market of industrial goods contributed to the decline narrowing, according to the NBS.

A consumer selects tomatoes at a supermarket in Linyi City, east China's Shandong Province, June 12, 2024.

China's consumer prices gained for the fourth straight month in May in the latest sign of a steady domestic demand recovery, official data showed Wednesday.

The consumer price index (CPI), a main gauge of inflation, was up 0.3 percent year on year last month, said the National Bureau of Statistics (NBS). (Photo by Wu Jiquan/Xinhua)

A consumer selects fruits at a supermarket in Binzhou City, east China's Shandong Province, June 12, 2024.

China's consumer prices gained for the fourth straight month in May in the latest sign of a steady domestic demand recovery, official data showed Wednesday.

The consumer price index (CPI), a main gauge of inflation, was up 0.3 percent year on year last month, said the National Bureau of Statistics (NBS). (Photo by Chu Baorui/Xinhua)

A consumer selects fruits at a supermarket in Xinghua City, east China's Jiangsu Province, June 12, 2024.

China's consumer prices gained for the fourth straight month in May in the latest sign of a steady domestic demand recovery, official data showed Wednesday.

The consumer price index (CPI), a main gauge of inflation, was up 0.3 percent year on year last month, said the National Bureau of Statistics (NBS). (Photo by Zhou Shegen/Xinhua)