China inflation slows to 2.1pc, lending falls point to economic weakness
The National Bureau of Statistics said China’s consumer inflation slowed to 2.1 per cent, the lowest in three months, while producer prices fell 2.9 per cent from a year earlier, the lowest since September.
China’s annual consumer inflation slowed in May while growth in bank lending fell below expectations, data showed on Sunday, piling up more evidence that the world’s second-largest economy could slow further in the current quarter.
The National Bureau of Statistics said China’s consumer inflation slowed to 2.1 per cent, the lowest in three months, while producer prices fell 2.9 per cent from a year earlier, the lowest since September.
Economists polled by Reuters had expected annual consumer inflation of 2.5 per cent and factory-gate prices to fall 2.5 per cent in May.
“The inflation data showed China’s economic growth continued to slow down. Second-quarter growth is probably even slower than the first-quarter. In particular, the PPI data showed very weak demand,” said Jianguang Shen, chief China economist at Mizuho Securities Asia in Hong Kong.
Adding to the evidence of a slowdown was separate central bank data showing that Chinese banks lent 667.4 billion yuan (US$109 billion) in new local currency loans in May, missing market expectations of 850 billion yuan and lower than April’s 792.9 billion yuan.
The broad M2 money supply (demand deposits, time deposits and money market mutual funds) rose 15.8 per cent in May from a year earlier, slightly below a median forecast of 15.9 per cent in a Reuters poll, while China’s total social financing aggregate, a broad measure of liquidity in the economy, was 1.19 trillion yuan in May versus 1.75 trillion yuan in April.
China’s fiscal policy in the second half needs to protect consumption growth and support investment