China factory gate deflation deepens on global demand slump GlobeBusiness
Exports contracted in May as global coronavirus lockdowns continued to devastate demand while a deeper fall in imports pointed to mounting pressure on the key manufacturing sector.Beijing has in recent months rolled out fiscal and monetary stimulus to prop up the economy, which contracted for the first time on record in the January-March period.
“We believe falling CPI inflation and continued PPI deflation will provide Beijing with more space to implement policy stimulus to offset the impact of COVID-19 on the economy,” Nomura analysts said in a research note. The consumer price index rose 2.4 per cent from a year earlier - the weakest reading since March 2019 - compared with a 3.3 per cent increase in April, as food prices continued to ease. Analysts had projected a 2.7 per cent rise.
Martin Rasmussen, China economist at Capital Economics, said an acceleration in infrastructure construction looks set to drive a rebound in producer prices.
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