China's National Bureau of Statistics reported a 0.1% drop in consumer prices in May, raising new concerns about deflation and a lack of measures to stimulate domestic consumption.
Consumer Price Data from China
The National Bureau of Statistics of China reported a 0.1% drop in consumer prices in May, marking the fourth consecutive decline this year. Analysts had anticipated a 0.2% decrease, considering price wars in the automotive industry that significantly affected pricing dynamics. CPI also fell in February (-0.7%), March, and April (-0.1%).
Authorities' Response to Price Decline
The Chinese government has called for an end to price wars in the automotive sector, which threaten business profitability and sustainability. The automotive ministry issued a statement indicating that there are no winners in such wars. Prices for coal, oil, and gas have plummeted by 18.2% and 17.3%, respectively. NBS Chief Statistician Lijua Dong emphasized the need for targeted stimulus measures to improve consumption.
Impact of Tariffs and Trade Wars on China's Economy
U.S. tariffs on Chinese goods, which have risen to 145%, prompted Chinese financial regulators to introduce policies to support the economy. Chinese Vice Premier He Lifeng is expected to meet with U.S. Treasury Secretary for renewed trade talks. Following a recent agreement between the two countries, tariffs are expected to be reduced, which may aid in improving economic conditions.
The decline in consumer prices in China continues to raise concerns about deflation and the need for additional measures to stimulate the economy. Future actions by state authorities and regulators may play a significant role in recovering domestic demand.
