China’s Consumer Prices Rise 0.2%; Factory Gate Deflation Accelerates in May

China’s consumer price index increased 0.2% year-over-year in May, while factory gate prices declined at the fastest pace in seven years, data from the National Bureau of Statistics showed Friday.

Inflation as measured by the Consumer Price Index (CPI) rose 0.2% from a year ago, following a rise of 0.1% in the previous month, whereas Reuters polled economists predicted a 0.3% increase. Month-on-month, prices fell 0.2% — economists predicted a 0.1% decline.

In the meantime, the producer price index fell 4.6% in May, compared to a decline of 3.6% in April, the sharpest pace in seven years in May and quicker than projections, since weak demand impacted on manufacturing and the fragile economic recovery. Economists polled by Reuters predicted a 4.3% drop in producer prices.

China’s low consumer inflation and production price deflation stand in stark contrast to the relatively high inflation seen by major economies throughout the world.