A worker walks past steel rolls at the Chongqing Iron and Steel
plant in Changshou, Chongqing, China August 6, 2018. Picture taken August 6,
2018. REUTERS/Damir Sagolj
BEIJING,
June 9 (Reuters) - China's factory gate prices fell at the fastest pace in
seven years in May and quicker than forecasts, as faltering demand weighed on a
slowing manufacturing sector and cast a cloud over the fragile economic
recovery.
As rising
interests rates and inflation squeeze demand in the United States and Europe,
China is in contrast battling a sharp decline in prices with factories
receiving less for their products from key overseas markets.
The producer price index (PPI) for
May fell for an eighth consecutive month, down 4.6%, the National Bureau of
Statistics (NBS) said on Friday. That was the fastest decline since February
2016 and bigger than the 4.3% fall in a Reuters poll.
"The
risk of deflation is still weighing on the economy," said Zhiwei Zhang,
chief economist at Pinpoint Asset Management, in a note. "Recent economic
indicators send consistent signals that the economy is cooling," he added.
China's
economy grew faster than expected in the first quarter, but recent indicators
show demand is rapidly weakening with exports, imports and factory activity
falling in May.
The consumer price index (CPI) rose
0.2% year-on-year, speeding up from a 0.1% rise in April but, missing a forecast
for a 0.3% increase.
Food
price inflation, a key driver of CPI, slowed to 1.0% year-on-year from 2.4% in
the previous month. On a month-on-month basis, food prices fell 0.7%.
The
Australia dollar eased 0.2% to $0.6704, tracking a fall in the Chinese currency
yuan after the inflation data.