(Yicai) June 9 -- China’s consumer prices fell in May for the fourth consecutive month, while factory gate prices tumbled at the fastest pace in seven months.

The consumer price index fell 0.1 percent last month from a year earlier, according to data released by the National Bureau of Statistics today. That compares with the average 0.13 percent dip forecast by 14 leading China-based chief economists polled by Yicai. On a monthly basis, the CPI inched down 0.2 percent.

In the prior three months, the CPI had declined by 0.1 percent, 0.1 percent, and 0.7 percent after increasing by 0.5 percent in January.

May’s drop was mainly the result of lower energy prices, which plunged 6.1 percent from a year ago. The core CPI, which excludes food and energy prices, climbed 0.6 percent after a 0.5 percent increase the month before.

Prices are showing positive changes because the relationship between supply and demand has improved in some areas after China took more proactive and targeted measures to boost consumption, NBS Chief Statistician Dong Lijuan said at a press briefing.

Factory Gate Prices

Last month, ex-works prices fell at the fastest clip since October, marking the 32nd consecutive month of decline. The producer price index fell 3.3 percent from a year earlier, the NBS data showed. The chief economists surveyed by Yicai had expected the PPI to fall 3.06 percent. On a monthly basis, the PPI dipped 0.4 percent.

The gauge tumbled partly as a result of external factors, including lower international crude oil prices that weighed on domestic oil-related industries.

Prices remain at a low level overall, which will amplify operating pressure on businesses and could hurt employment and incomes, NBS spokesperson Fu Linghui said. China should continue to give full play to economic policy coordination, further expand domestic demand, deepen supply-side reform, improve economic circulation, and promote an orderly price recovery, Fu noted.

A rebound in inflation may face pressure from both internal and external factors in the short term, with the CPI likely to also fall in the second and third quarters and the PPI probably declining throughout the year, Wu Chaoming, chief economist at Chasing Financial, told Yicai.

China is expected to implement another round of policies to expand domestic demand and promote innovation that will focus on stabilizing employment, businesses, the market, and expectations, addressing external uncertainties with the certainty of domestic high-quality growth, and reversing the current low inflation trend, Wu added.

Editor: Futura Costaglione