China Consumer Prices Fall Fourth Month Amid Trade Tensions

China's consumer prices fell for the fourth consecutive month in May, with the consumer price index (CPI) declining 0.1% year-on-year, slightly better than forecasted. Producer prices experienced a sharper drop, falling 3.3% year-on-year, marking the deepest contraction in nearly two years amid weak domestic demand and ongoing trade tensions with the United States. The deflationary trend reflects persistent challenges including sluggish consumption, oversupply, and the impact of high U.S. tariffs on Chinese exports. Despite government stimulus efforts such as interest rate cuts and reserve requirement reductions, consumption has not sufficiently rebounded. Upcoming trade talks between China and the U.S. in London aim to address these economic pressures, following a preliminary tariff reduction deal reached in Geneva. Analysts expect further fiscal measures to support consumption and mitigate deflationary risks as the economy grapples with a prolonged housing downturn and weakened export orders.