China’s annual inflation held steady at 1.2% in May 2026, unchanged from the previous month but slightly below market expectations of 1.3%. Non-food inflation edged higher (1.9% vs 1.8% in April), lifted by an acceleration in transport costs (5.4% vs. 4.6%) amid higher energy prices and supply-chain disruptions linked to the ongoing Middle East conflict. Prices also continued to rise for clothing (1.4% vs. 1.5%), healthcare (2.1% vs. 2.2%), and education (1.3% vs. 1.3%). Meanwhile, housing costs remained subdued (-0.2% vs. -0.2%). On the food side, prices fell for the second straight month (-1.7% vs -1.6%), marking the sharpest drop since October, largely due to persistently weak pork prices and continued declines in fresh fruit costs. Core inflation, excluding food and energy, rose 1.1% yoy, after April’s 1.2% gain. On a monthly basis, consumer prices edged down 0.1%, reversing a 0.3% increase in April. However, the decline was milder than forecasts of a 0.2% drop.

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