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Investing.com-- Chinese consumer price index inflation eased for a fourth straight month in May, while producer inflation fell by its sharpest pace in nearly two years as the country continued to grapple with a bitter trade war with the U.S.
CPI inflation fell 0.1% year-on-year in May, in line with forecasts and following a similar decline in the previous month, government data showed on Monday.
Month-on-month CPI fell 0.2%, compared to a 0.1% rise last month.
The reading highlighted continued weakness in domestic spending as Beijing has been struggling to shore up over the past two years.
The inflation data came ahead of U.S.-Sino trade talks in London due later in the day. The upcoming talks follow a temporary diplomatic thaw reached in Geneva last month. Reaching a trade deal may result in lower U.S. tariffs on China, easing a key drag on the economy seen through April.
Focus is now on more fiscal measures in China, which are expected to be aimed chiefly at shoring up consumption.
The impact was most noticeable in the producer price index inflation data, which shrank 3.3% y-o-y in May in its worst monthly drop in 22 months. This compared to last month’s 2.7% drop, and was worse than forecasts of a 3.1% fall.
Chinese producers were seen grappling with a sharp decrease in overseas orders, while local demand also cooled as hefty U.S. tariffs weighed on sentiment.
May’s inflation reading was subdued despite expectations of increased local spending due to the Labour Day holiday week.