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In China, consumer price inflation remains very low. Moreover, now that the fall in producer prices has accelerated, the central bank still has sufficient room to stimulate the weakening economy.

In May, consumer prices rose by 0.2 percent on an annual basis, according to the National Statistics Office in Beijing on Friday. Experts had expected a value of this magnitude. In April, inflation fell surprisingly sharply to 0.1 percent.

With a decrease of 4.6 percent compared to last year, prices at producer level fell even more sharply in May than recently. Economists had expected an average fall of 4.3 percent. In the previous month, producer prices fell by 3.6 percent.

After producers had to accept double-digit price increases in late 2021 or early 2022, they are now falling for the eighth month in a row. The decline in May was the highest since 2016.

Given the latest economic data, experts like Zhiwei Zhang, chief economist at Pinpoint Asset Management, see the risk of deflation in China. Deflation is the opposite of inflation and refers to the fall in the general level of prices.

For most experts, deflation is more dangerous for the development of an economy than slightly rising prices. At first glance, consumers benefit from this because they pay less for goods and services. However, deflation normally also depresses corporate profits and thus carries the risk of lower wages or layoffs. (sda/awp/dpa)