China’s producer prices fell 3.3% year-on-year in May 2025, slightly above market expectations of a 3.2% decline and following a 2.7% drop in April. This marked the 32nd consecutive month of producer deflation and the steepest decline since July 2023, driven by rising external risks amid uncertainty over US tariffs and persistently weak domestic demand. On a monthly basis, producer prices shrank 0.4% in May, the same pace as in April and remaining at the largest drop in six months. For the first five months of the year, factory-gate prices slipped 2.6%, compared with a 2.4% fall in the same period of 2024.