China’s consumer inflation remained unchanged in May, while declines in producer prices eased slightly. However, the overall trend suggests that Beijing may need to implement additional measures to bolster weak domestic demand and support an uneven economic recovery.

Despite multiple rounds of support measures, weak consumption has constrained consumer prices in China since 2023, as confidence remains low amid an ongoing property sector crisis. Economists argue that further coordinated fiscal and monetary stimulus efforts are necessary to sustainably boost demand.

According to data from the National Bureau of Statistics (NBS), the consumer price index (CPI) increased by 0.3% in May compared to a year earlier, matching the gain seen in April but falling below the 0.4% increase forecasted in a Reuters poll. Producer prices, which had been in deflation since September 2022, declined at a slower pace of 1.4% in May, compared to a 2.5% contraction in April, and slightly better than the forecasted 1.5% decline.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, noted that deflationary pressures have not subsided entirely. He attributed the improvement in producer prices to rising commodity prices like copper and gold, which do not necessarily reflect robust domestic demand in China.

Zhang’s perspective aligns with the weak month-on-month CPI gauge, which decreased by 0.1% in May, contrasting with a 0.1% rise in April and falling short of economists’ forecasts for zero growth.