2025-06-09-花旗集团-中国经济_GDP平减指数将连续第九个季度为负_10页_197kb

China Economic Summary: June 9, 2025

• Inflation Overview: CPI inflation remained weak, recording a fourth consecutive negative reading of -0.1% YoY in May, largely in line with expectations. Food prices saw limited contraction, with specific items like beef and pork showing moderation or slight improvement due to supply-side factors. Energy prices were a key driver of weakness, with transportation fuel declining sharply.

• Core Inflation: Core goods inflation slightly increased to 0.7% YoY due to base effects, but momentum for big-ticket items like autos, telecom equipment, and appliances weakened, reflecting reduced demand and price competition.

• PPI Deflation: Producer Price Index deflation deepened in May, with a broader spread to upstream sectors. Global oil and chemical prices declined, exacerbating domestic commodity softness, such as cement and ferrous metals, which aligns with muted construction activity.

• GDP Deflator: The GDP deflator is expected to remain negative for the ninth consecutive quarter in 2025, with potential widening contraction, highlighting the disconnect between macroeconomic stability and microeconomic sentiment.

• Policy Outlook: Citi maintains realistic policy expectations, anticipating no major changes before September, barring significant global or domestic shifts. Potential policy actions include a 10bps rate cut and 50bps RRR cut in the second half of 2025, though an interim budget revision is not expected.

• Conclusion: Inflation dynamism in China remains subdued, dependent on global economic conditions and ongoing policy support. Despite low growth in inflation indicators, the economy's overall trajectory is expected to remain stable with targeted interventions.