Consumer prices in China saw a modest increase last month, according to data released on Wednesday. The consumer price index (CPI) rose by 0.3 percent year-on-year in May, matching April's growth but falling short of the 0.4 percent expected by Bloomberg analysts. This marks the fourth consecutive month of positive territory for the CPI.

However, factory gate prices continued to decline, extending a deflationary trend that has persisted since late 2022. The producer price index (PPI) dropped 1.4 percent year-on-year in May, which, although better than the 2.5 percent drop in April, still indicates ongoing challenges. The May PPI decline was slightly less severe than Bloomberg's forecast.

Chinese leaders are striving to boost consumer spending amid economic challenges such as rising property sector debt and high youth unemployment. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, noted that the improvement in the PPI was driven largely by commodity prices, such as copper and gold, rather than by domestic demand.

Zhang also mentioned that recent measures to alleviate pressure on the real estate sector are positive but have not yet led to a rebound in property sales. He suggested that a more comprehensive and proactive policy approach, including fiscal, monetary, and property sector measures, might be necessary to more effectively stimulate domestic demand.