CPI and PPI fall, but deflation threat eases

Consumer and producer price indices continued to fall in May despite recent rises in commodity prices, but analysts say both the indices are likely to register positive growth in the second half of the year and the threat of inflation may loom next year.

The consumer price index (CPI) fell 1.4 percent in May from a year earlier, the National Bureau of Statistics said yesterday. The producer price index (PPI), which monitors factory-gate price changes, also dropped at an annualized rate of 7.2 percent.

Since the outbreak of the financial crisis, economists have fretted that the nation may have to battle with deflation - which features a prolonged period of price declines, economic contraction and slow credit growth.