China's inflation eased unexpectedly in May on food inflation and producer prices dropped at a slower pace, providing room for further stimulus to prop up growth, if needed.
The National Bureau of Statistics reported that consumer prices gained 2 percent in May from last year, while it was forecast to remain unchanged at 2.3 percent seen in April.
It continues to remain below the full-year target of 3 percent.
Food prices were up 5.9 percent on year, much slower than April's 7.4 percent growth. At the same time, non-food price inflation held steady at 1.1 percent.
On a monthly basis, consumer prices slipped 0.5 percent after dipping 0.2 percent in April. This was the third consecutive decline in prices.
Another report from the NBS showed that producer prices dropped at a slower pace of 2.8 percent following a 3.4 percent decrease.
Prices were expected to decline 3.2 percent. The PPI has been falling for more than four years.
On a monthly basis, producer prices gained 0.5 percent, which was the third consecutive rise in prices.
A further recovery in producer price inflation in the coming quarters is expected as commodity price deflation continues to ease, Julian Evans-Pritchard at Capital Economics, said.
The upshot is that inflation is unlikely to become a big concern for policymakers this year, allowing them to focus on more pressing issues such as financial stability and structural reform, the economist added.
by RTT Staff Writer
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