Chinese manufacturers prices on the sharpest decline since March 2016

Chinese producer prices fell again considerably in May, mainly due to lower prices in the oil and energy sector. According to the statistics bureau, prices that Chinese manufacturers charge for their products fell 3.7 percent year-on-year last month, the sharpest decline since March 2016.

In April, producer prices already fell by 3.1 percent. As a result of the corona crisis, the demand for Chinese goods in the world is under pressure, which in turn is causing weaker prices, on top of which lower energy prices. Economists expect this weak price environment to continue for the time being.

Producer prices also fell in Japan, down 2.7 percent year-on-year in May. This was already down 2.4 percent in April.

Inflation also came out in China. That amounted to 2.4 percent in May on an annual basis, compared to 3.3 percent in April. The weakening inflation in China was mainly due to the less sharp rise in food prices. Core inflation, i.e. without food and energy, remained unchanged at 1.1 percent.

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