National Bureau of Statistics (NBS): CPI declined slightly in May, while the YoY growth of core CPI expanded, and PPI fell by 0.4% MoM.

According to data from the National Bureau of Statistics (NBS), in May, the national consumer price index (CPI) decreased by 0.1% YoY. Among them, prices in urban areas remained flat, while those in rural areas decreased by 0.4%; food prices decreased by 0.4%, and non-food prices remained flat; consumer goods prices decreased by 0.5%, while service prices increased by 0.5%. From January to May, the national CPI decreased by 0.1% compared to the same period last year. In May, the national CPI decreased by 0.2% MoM. NBS data also showed that in May, the Producer Price Index (PPI) for industrial producers decreased by 0.4% MoM, the same rate of decline as the previous month, and decreased by 3.3% YoY, with the rate of decline expanding by 0.6 percentage points compared to the previous month. The main reasons for the MoM decline in PPI this month are as follows: Firstly, international imported factors influenced the price decline in related domestic industries. The decline in international crude oil prices affected the price decline in domestic petroleum-related industries, with prices in the oil and natural gas extraction industry decreasing by 5.6%, prices in refined petroleum product manufacturing decreasing by 3.5%, and prices in the chemical raw materials and chemical products manufacturing industry decreasing by 1.2%. The combined impact of these three industries on the MoM decline in PPI was approximately 0.23 percentage points, accounting for more than half of the total decline. Secondly, there was a phased decline in the prices of some domestic energy and raw materials. Coal demand was in the off-season, with sufficient coal reserves in power plants and ports. Additionally, the low cost and strong substitution effect of new energy power generation led to a 3.0% decrease in prices in the coal mining and washing industry and a 1.1% decrease in coal processing prices. The increase in high-temperature and rainy weather in the south China region affected the construction of some real estate and infrastructure projects. Coupled with the sufficient supply of building materials such as steel and cement, prices in the ferrous metal smelting and rolling processing industry and the non-metallic mineral products industry both decreased by 1.0%. The combined impact of these four industries on the MoM decline in PPI was approximately 0.18 percentage points.

CPI Slightly Declined in May 2025, While Core CPI YoY Growth Rate Expanded

—Interpretation of CPI and PPI Data for May 2025 by Dong Lijuan, Chief Statistician of the Urban Department, National Bureau of Statistics

In May, the CPI decreased by 0.2% MoM and 0.1% YoY. Excluding food and energy prices, core CPI increased by 0.6% YoY, with the growth rate expanding by 0.1 percentage points compared to the previous month. The PPI for industrial producers decreased by 0.4% MoM, the same rate of decline as the previous month, and decreased by 3.3% YoY, with the rate of decline expanding by 0.6 percentage points compared to the previous month. China is boosting consumption with greater intensity and more precise measures, fostering the growth of new quality productive forces. The supply-demand relationship in some areas has improved, and prices have shown positive changes.

I. CPI Slightly Declined, While Core CPI YoY Growth Rate Expanded

The shift from an increase to a decrease in the MoM CPI was mainly influenced by the decline in energy prices. Energy prices fell 1.7% MoM, contributing to a decrease of approximately 0.13 percentage point in the month-on-month decline of the CPI, accounting for nearly 70% of the total CPI decline. Among them, gasoline prices dropped 3.8%, with the decline widening by 1.8 percentage points from the previous month. Food prices decreased 0.2%, with the decline being 1.1 percentage points smaller than the seasonal level, contributing to a decrease of approximately 0.04 percentage point in the month-on-month decline of the CPI. Among them, the supply of seasonal vegetables increased, leading to a 5.9% drop in fresh vegetable prices. Prices of eggs, pork, and poultry meat declined slightly and steadily, with declines ranging from 0.3% to 1.0%. Affected by factors such as heavy rainfall in some regions and the summer fishing moratorium, the supply of fresh fruits, freshwater fish, and marine fish decreased, with prices rising by 3.3%, 3.1%, and 1.5%, respectively. As consumer demand continued to recover, coupled with the impact of holidays and cultural and recreational activities held across the country, hotel accommodation and tourism prices rose by 4.6% and 0.8%, respectively, both higher than the seasonal levels. Among them, the increase in hotel accommodation prices reached a record high for the same period in the past decade. With the arrival of the summer clothing season, clothing prices rose by 0.6%.

The CPI declined slightly YoY, with the decline remaining the same as the previous month. Among them, energy prices fell 6.1% YoY, with the decline widening by 1.3 percentage points from the previous month, contributing to a decrease of approximately 0.47 percentage point in the year-on-year decline of the CPI, which was the main factor behind the year-on-year decline of the CPI. Policies aimed at boosting consumption continued to show effects, with prices in some areas showing positive changes. The core CPI rose 0.6% YoY, with the increase widening by 0.1 percentage point from the previous month. Among them, prices of industrial consumer goods excluding energy rose 0.6%, with the increase widening by 0.2 percentage point from the previous month. Prices of gold jewelry, home textiles, and cultural and recreational durable consumer goods rose by 40.1%, 1.9%, and 1.8%, respectively, with all increases widening. Prices of gasoline-powered passenger cars and new energy passenger cars fell by 4.2% and 2.8%, respectively, with both declines narrowing. Service prices rose 0.5%, with the increase widening by 0.2 percentage point from the previous month. Among services, rental fees for transportation vehicles, airfares, and tourism prices all turned from decline to increase, rising by 3.6%, 1.2%, and 0.9%, respectively.

II. PPI Remains Low, with Price Improvements in Some Sectors

 The main reasons for the month-on-month decline in PPI this month are as follows: First, international imported factors have influenced the decline in prices of related domestic industries. The decline in international crude oil prices has affected the decline in prices of domestic petroleum-related industries, with prices in the oil and natural gas extraction industry falling by 5.6%, prices in the refined petroleum product manufacturing industry falling by 3.5%, and prices in the chemical raw materials and chemical products manufacturing industry falling by 1.2%. These three industries collectively contributed to a decrease of approximately 0.23 percentage point in the month-on-month decline of the PPI, accounting for more than 50% of the total decline. Second, the prices of some domestic energy and raw materials declined in phases. Coal demand was in the off-season, with sufficient coal reserves at power plants and ports. Coupled with the low cost and strong substitution effect of new energy power generation, the prices of coal mining and washing industry fell by 3.0%, and coal processing prices dropped by 1.1%. Increased high-temperature and rainy weather in south China affected the construction of some real estate and infrastructure projects. Additionally, the supply of building materials such as steel and cement was sufficient. As a result, the prices of ferrous metal smelting and rolling processing industry, and non-metallic mineral products industry both declined by 1.0%. The combined impact of these four industries on PPI was a MoM decline of approximately 0.18 percentage points.

  Coupled with factors such as a higher comparison base in the same period last year, the YoY decline in PPI expanded by 0.6 percentage points compared to the previous month. However, from the perspective of marginal changes, China's macro policies have been intensively implemented, the supply-demand relationship in some industries has improved, and prices in some areas have shown a positive trend. First, the continuous growth of new consumption momentum has driven the YoY rebound in prices of consumer goods. Policies aimed at boosting consumption have continued to take effect, and the release of demand for some consumer goods has driven price increases in related industries. The MoM decline in consumer goods prices turned to flatness from a 0.2% decline in the previous month. Among them, the prices of clothing, general daily necessities, and durable consumer goods rose by 0.2%, 0.1%, and 0.1%, respectively, driving the YoY decline in consumer goods prices to narrow by 0.2 percentage points compared to the previous month. From an industry perspective, the prices of arts and crafts and ceremonial products manufacturing increased by 12.8% YoY, the prices of footwear manufacturing rose by 0.8%, the prices of computer whole machine manufacturing increased by 0.2%, and the YoY declines in the prices of household washing machines, television manufacturing, and automobile whole vehicle manufacturing narrowed by 1.6, 1.4, and 0.6 percentage points, respectively, compared to the previous month. Second, the development of industries such as high-end equipment manufacturing has driven YoY price increases in related industries. The transformation of industries towards high-end, intelligent, and green development has steadily advanced, with an expanded demand for high-tech products, leading to YoY price increases in related industries. The prices of integrated circuit packaging and testing series, and aircraft manufacturing both rose by 3.6%, the prices of wearable smart device manufacturing increased by 3.0%, the prices of microwave communication equipment rose by 2.1%, the prices of servers increased by 0.8%, and the prices of semiconductor device manufacturing equipment increased by 0.7%. In addition, the supply-demand relationship in new energy industries such as PV and lithium battery has improved, with narrowed YoY price declines. The prices of PV equipment and components manufacturing, and lithium-ion battery manufacturing fell by 12.1% and 5.0%, respectively, with declines narrowing by 0.4 and 0.3 percentage points, respectively, compared to the previous month.