China consumer prices slump again, deepening deflation worries as demand stays weak

Thu Jun 12 04:10:00 UTC 2025: **News Article:**

**China’s Deflationary Pressures Persist as Consumer Prices Fall for Fourth Straight Month**

Beijing – China’s consumer prices continued their downward trend in May, marking the fourth consecutive month of decline and raising concerns about the effectiveness of current stimulus measures. The consumer price index (CPI) fell 0.1% year-on-year, according to the National Bureau of Statistics, falling short of expectations. This persistent deflationary pressure, which began in February, is partly attributed to weak consumer demand and intense price wars in sectors like the automotive industry.

While core inflation, excluding food and energy, showed a slight increase, producer prices deepened their decline, falling 3.3% year-on-year, the steepest drop since July 2023. Experts point to the automotive price wars and declining property prices as major contributors to the deflationary trend.

Analysts emphasize that relying on domestic demand is crucial to combatting the deflation. NBS Chief Statistician Lijuan Dong urged more forceful and targeted stimulus.

Recent efforts by Chinese regulators to boost the economy include interest rate cuts and a reduction in the reserve requirement ratio for banks. Additionally, a preliminary trade deal with the U.S. in Geneva has led to a temporary reduction in tariffs. Chinese Vice Premier He Lifeng is expected to meet with the U.S. trade negotiation team led by Treasury Secretary Scott Bessent in London later in the day for renewed trade talks.

However, trade tensions persist, with both countries accusing each other of violating the Geneva agreement.

As markets remain uncertain about the future of the trade truce, analysts are watching for further monetary easing measures from Beijing. The upcoming Lujiazui forum in Shanghai, where top financial regulators will speak, is expected to reveal significant policy decisions. Investors are also awaiting China’s May trade data, which is expected to show growth in exports but a decline in imports.

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