Official data released this week showed that China's producer price index (PPI), which tracks costs for goods at the factory gate, experienced a notable improvement in May.

The index recorded a year-on-year decline of 1.4%, marking a narrower decline compared to the 2.5% drop observed in the previous month.

The National Bureau of Statistics (NBS) attributed this improvement in China's producer price index to increasing international commodity prices and better supply-demand dynamics within the domestic market for industrial goods.

According to the data, the PPI in China increased by 0.2% on a monthly basis in May. This indicates a reversal from a 0.2% decline the previous month and brought an end to six consecutive months of decreasing PPI.

In May, China's coal mining and washing industry experienced a 0.5% increase in prices compared to the previous month, Shine News reports. This rise was attributed to tight supply conditions in key coal-producing regions and increased demand as power plants replenished their stocks in preparation for peak summer usage.

Furthermore, prices in China's ferrous metal smelting and pressing industry increased by 0.8% in May compared to the previous month, supported by positive market outlooks stemming from significant equipment upgrades in the country.

Similarly, the non-ferrous metal smelting and pressing industry saw prices rise by 3.9% month-on-month, influenced by higher prices in the international market.

Additionally, China's consumer price index (CPI), a key measure of inflation, increased by 0.3% year-on-year in May, according to the National Bureau of Statistics.

Meanwhile, the core consumer price index (CPI), which excludes food and energy prices, rose by 0.6% to maintain its upward trend.

“The consumer market continued its stable performance in May,” said NBS statistician Dong Lijuan.

The CPI in China decreased by 0.1% on a monthly basis in May, showing a slight softening compared to the 0.1% increase seen in April. This decline was smaller than the average 0.2% drop typically seen during the same period over the past decade.