China’s CPI up 2.7%, PPI gain 0.6% in May, broadly within expectations

Consumer prices and producer prices in China were broadly in line with expectations for the month of May, as the African swine fever drove the prices of pork higher while the rebounding factory prices reflected stimulus support from the Chinese government.

The Consumer Price Index (CPI) for May was up 2.7% from a year ago, the highest pace since February 2018, China’s National Bureau of Statistics said on Wednesday. The reading was within analysts’ expectations.

Food prices rose 7.7% in May from a year ago, while the prices of non-food items rose 1.7%. Pork prices have been consistently high this year due to the Africa swine fever which drove prices up. For last month, pork prices rose 18.2% from a year ago.

Prices of industrial products for the domestic market eased from the previous month, with the Producer Price Index (PPI) up 0.6% in May on a year-on-year basis, aligned with market expectations.

The inflation data comes on the back of a trade war between China and the United States (US). So far, the US had imposed duties on US$250 billion worth of Chinese goods, while Beijing has placed tariffs on US$110 billion in American goods.

US president Donald Trump said on Monday he is prepared to impose additional tariffs on at least US$300 billion worth of Chinese goods after the Group of 20 summit, which is slated to take place on June 28 and 29.

China’s consumer inflation target for this year is at around 3.0%, in the same pace of increase as the previous year.

AUD/USD little changed at US$0.6952

The muted inflation data from Australia’s largest customer led to a lacklustre reaction from the AUD/USD. The Aussie dollar was little changed against the US dollar, as it was down by 0.15% at US$0.6952 from the opening price of US$0.6961, at around 11.30am Hong Kong time, IG data showed.