China faces deepening deflation risk as consumer prices slide again
Deflation continues to challenge China’s economy as consumer prices dropped for a fourth straight month, falling 0.1% in May. Despite national holidays and price cuts from companies like BYD, domestic demand remains weak. Factory prices plunged 3.3%, the steepest drop in nearly two years. Analysts warn of worsening deflation and slowing growth in the second half of 2025, with the IMF forecasting zero inflation for the year — the weakest since 2009.
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