Consumer prices are expected to decline 0.1% in May and rise 0.3% year on year. April’s CPI report showed inflation virtually evaporated, highlighting Beijing’s challenge to stimulate enough economic activity and growth to kill the threat of deflation.
It is proving to be a major headache – outright producer price deflation is expected to have intensified in May, with the annual rate of price falls accelerating to 4.3%, according to a Reuters poll. That would be the fastest rate of PPI decline since March 2016.
China’s yuan has been sliding to fresh 2023 lows nearly every day for the past three weeks and the main stock indexes have followed a similar pattern, but it’s a different story elsewhere.
Revised figures on Thursday showed Japan’s economy grew much faster than initially thought over the January-March period, as a post-pandemic pickup in domestic spending and company restocking offset the hit to exports from slowing global demand.
The Japanese yen rallied strongly, also propelled further by a soft U.S. employment indicator to its best day in a month. The weak jobless claims figures torpedoed the dollar more broadly, sank Treasury yields, and cooled Fed rate hike expectations.
