China39;s consumer inflation steady, factory deflation eases
Underlying demand weakness reinforces need for more stimulus
Property sector crisis remains biggest drag on confidence, demand

BEIJING, June 12 Reuters China39;s consumer inflation held steady in May while producer price declines eased, but the underlying trend suggests Beijing would need to do more to prop up feeble domestic demand and an uneven economic recovery.

Weak consumption in China has kept a lid on consumer prices since 2023 despite many rounds of support measures as confidence remains low amid a protracted property sector crisis. Economists say a further round of stronger and coordinated fiscal and monetary stimulus steps are required to sustainably drive up demand.

The consumer price index CPI rose 0.3 in May from a year earlier, matching a gain in April, data from the National Bureau of Statistics NBS showed on Wednesday, below a 0.4 increase forecast in a Reuters poll.

Producer prices, which were stuck in deflation since September 2022, fell at a slower 1.4 pace in May after contracting 2.5 in April, and compared with a forecast 1.5 decline.

I think the deflationary pressure has not faded yet, said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

The improvement in PPI is largely driven by commodity prices such as copper and gold, which is not a reflection of Chinas domestic demand, he said.

Zhang39;s view was backed by the weak monthonmonth CPI gauge, which was down 0.1…