Cheap Vegetable Prices Keep Chinese Inflation Low And The Door Open For More Stimulus

Sam Ro | Jun. 8, 2013, 11:13 PM | 1,001 | BAML

China's National Bureau of Statistics has released its latest inflation stats, and consumer and producer prices came in cooler than expected.

"The lower than expected CPI in May was mainly driven by an unusually large sequential decline in vegetable prices," note Bank of America Merrill Lynch's Ting Lu.

"Though falling inflation might trigger concerns about weaker-than-expected growth and deflation risk, the low inflation will give policymakers more room to maintain accommodative monetary and fiscal policies."

Lu attributed some of the low inflation to weak external demand as reflected by China's weak export numbers.

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