China’s CPI, the main gauge of inflation, fell 1.4 percent year on year in May, the National Bureau of Statistics (NBS) announced. It is also the fourth consecutive monthly decline since the index dropped 1.6 percent in February. However, the decline was 0.1 percentage points lower than the April level.

Tang Jianwei, an economist at the Bank of Communications, attributed the declining CPI to falling food prices from the price hike early last year.

Food prices, which comprise a third of the CPI, dropped 0.6 percent. Pork prices continued to fall by 32 percent on oversupply and concerns that the A/H1N1 influenza virus that was initially called swine flu.

On the other hand, the producer price index (PPI), which measures inflation at the wholesale level, fell for the third straight month, dropping 7.2 percent year-on-year in May, the NBS said.

As for PPI, the fast growth of prices in the first eight months of 2008 had also been a cause for the further decline, according to a statement on the NBS website. If compared with the PPI in the previous year, the decline rate comes out higher than in a month-to-month comparison. .

Despite price rebounds in major industrial products during the past two months, prices are still lower than the same period last year, the NBS report said.

Source : Konaxis