China's inflation likely eased

China's CPI inflation is likely to have eased again, to 1.3% y/y (-0.1% m/m) in May from 1.5% in April. Food prices likely dropped 0.8% m/m (after falling 0.96% in April) on lower vegetable, fruit and egg prices, based on interim data from the Ministry of Commerce and the National Bureau of Statistics. 

"On a y/y basis, food inflation is expected to have dropped to 1.8% y/y from 2.7% in April as the positive base effect reversed. Non-food prices likely increased 0.2% m/m, reflecting gasoline/diesel price hikes and the recent climb in rents. On a y/y basis, non-food inflation is expected at 1.1% y/y, up from 0.9% prior", forecasts Standard Chartered. 

Producer prices likely fell 4.4% y/y in May, following a 4.6% drop in April. On a m/m basis, the PPI rose in May - after 11 months of declines - as rising prices of nonferrous metal, rubber and chemical products offset the drop in energy and ferrous metal prices, according to interim Ministry of Commerce data. 

"The PMI input price index rose in May, although it stayed below 50. A quick turnaround in PPI deflation is not expected in the coming months. However, the decline is likely to narrow gradually in H2, boosted by a recovery in global commodity prices and a positive base effect", according to Standard Chartered.