BREAKING NEWS

BREAKING NEWS

Chinese inflation eases, producer prices still deflating

Now Reading:

Chinese inflation eases, producer prices still deflating

Text size Aa Aa

A sharp drop in food costs helped Chinese consumer inflation to drop to 1.2% in May, down from April’s 1.5%, and lower than forecast.

The producer price index stayed in negative territory, and the deflation now cemented in after four years of contraction is strengthening the argument for a more aggressive fiscal stimulus, which should be supplemented, say some economists, with a cut in interest rates.

Companies and banks are busy repairing their balance sheets and borrowing less, or not at all. Weak producer prices are also being compounded by recovering commodity prices.