May 2025 saw a decline of 0.1% year-on-year for the fourth consecutive month in China's Consumer Price Index (CPI). It mirrored the 0.1% decline recorded in April and slightly exceeded analyst estimates of a 0.2% fall.' Consistent weakness in consumer prices has led to negative readings of the CPI since February 2025, with previous declines measuring 0.7% during February and 0.1% in March and April.
The Producer Price Index (PPI) in China experienced a significant decline of 3.3% in May 2025, marking the biggest drop in 22 months. It exceeded the 2.7% decrease recorded in April and beat the projected 3.2% drop predicted by analysts. Despite ongoing challenges in the manufacturing and industrial sectors, the PPI has remained stagnant since October 2022, reflecting the overall trend of decreasing prices.
These continued falls of both CPI and PPM highlight the deflationary pressures on the Chinese economy. Several factors, including lower domestic demand and prolonged property decline, along with ongoing trade tensions, are responsible for these pressures.


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