China Producer Prices Change

China’s producer prices fell 3.3% yoy in May 2025, slightly above expectations of a 3.2% decline and after a 2.7% drop in April. This marked the 32nd consecutive month of producer deflation and the steepest decline since July 2023, driven by rising external risks amid uncertainty over US tariffs and persistently weak domestic demand. The cost of production materials fell at a faster pace (-4.0% vs -3.1% in April), with sharper declines in mining (-11.9% vs -9.4%) and raw materials (-5.4% vs -3.6%), while processing prices also fell further (-2.8% vs -2.3%). Consumer goods prices remained subdued (-1.4% vs -1.6%), pressured by declines in durable goods (-3.3% vs -3.7%) and food (-1.4% vs -1.4%). Clothing prices were flat (vs -0.1%), while daily-use goods prices rose at the same pace as previously (0.6%). Monthly, PPI shrank 0.4% in May, matching March's and April’s pace and marking the largest monthly drop in six months. For the 1st five months of 2025, factory-gate prices fell 2.6%.