In May 2009, domestic consumer price sees year-on-year decline of 1.4% (-0.1ppt mom), which is slightly below market decline expectation of 1.3%
Viewing from sub-items, decline margin of non-food price mainly causes the low-positioned CPI in May.
As driven by price soaring factors including product oil price surge on June 1 and water price adjustment to be implemented, we predict year-on-year increase of domestic residential consumption price will turn positive in Q3 2009.
Ex-factory price of industrial product sees year-on-year decrease of 7.2% (+0.6ppt mom).
The Rmb4tn stimulus plan has been implemented for six months since its beginning on November 2008. In the light of project progress, its effect has been totally presented. As a result, we predict growth of fixed assets investment as well as industrial production to see further improvement.