BEIJING (Reuters) – China’s factory-factory prices fell faster than expected in May as weak demand weighed on manufacturing, holding back a fragile economic recovery, while consumer inflation was weaker than expected.
The producer’s Office for National Statistics said the price index (PPI) fell for the eighth straight month in May, dropping 4.6%. Economists in a Reuters poll had forecast a 4.3 percent drop.
The Consumer Price Index (CPI) rose 0.2% YoY after rising 0.1% in the previous month, missing expectations for a 0.3% rise.
China’s economy grew faster than expected in the first quarter, but recent data showed factory activity contracted in May and imports fell.
Some economists expect the People’s Bank of China (PBOC) to cut interest rates or release more liquidity into the financial system. The bank lowered the reserve requirement ratio for banks in March.
Large Chinese banks said on Thursday they had lowered deposit rates, providing some relief to the financial sector by easing pressure on margins and lowering lending costs wider economic development.
Analysts have been lowering their forecasts for economic growth this year amid signs of a continued slowdown. The government has set a modest GDP growth target of around 5% for this year after significantly missing the 2022 target.