China's inflation eases to 3.0% in May

China's inflation rate eased to 3.0 percent in May, its lowest level since June 2010, according to latest official data, giving the government further room to loosen credit to boost flagging growth. The country's consumer price index (CPI) rose by 3.0 percent year-on-year in May compared with 3.4 percent in April and 3.6 percent in March, the National Bureau of Statistics said. The rate was lower than market expectations of a 3.2 percent rise, according to a poll of 15 economists by Dow Jones Newswires. "Inflation is easing as expected, or easing even faster than expected, which is mainly due to economic weakening not only in China, but also around the world," UBS economist Wang Tao told Dow Jones Newswires. Standard Chartered economist Li Wei, said he expected the trend to continue until the end of the year and full-year inflation to come in at around 2.0 percent, which would be down sharply on the 5.4 percent rate seen last year. "This means Beijing has great leeway to loosen macroeconomic policy to boost growth," he said. China has set itself the target of keeping annual inflation within four percent this year, fearing that surging prices carry the potential to cause social unrest as people grumble about paying more. But easing inflation should give China more room to ease monetary policy to combat slower economic growth. China's economy grew 8.1 percent in the first quarter of 2012 year-on-year, its slowest pace in nearly three years. Data due to be released later Saturday, including May's industrial production and retail sales, and January-May fixed-asset investment, were expected to give a further insight into the health of the Chinese economy. The data were weak across-the-board in April, prompting a series of stimulus measures by Beijing to help spur growth. Beijing slashed interest rates by 25 basis points on Thursday -- its first cut in more than three years -- and moved to allow rates to float more freely, in a bid to boost the slowing economy. Analysts said the moves sent a strong message that China is willing to ease monetary policy to shore up growth in the world's second largest economy, which has played a key role in supporting the global economy in the current downturn. China has also cut bank reserve requirements three times since December as policymakers aim to boost lending to spur growth. Alistair Thornton, Beijing-based China economist for IHS Global Insight, told AFP that further stimulus was likely in the coming months. "Growth in China is slowing rapidly, as price pressures continue to come off. That should act as a spur for government policy to combat the slowdown," he said. "We think it is very likely that there will be another interest cut through the rest of the year," while there was "clearly a lot more room" for cuts in bank reserve ratio requirements. Food prices were up 6.4 percent from a year earlier in May, compared with April's 7.0 percent rise, while non-food prices rose 1.4 percent from a year earlier, compared with April's 1.8 percent increase. The producer price index (PPI), which measures the cost of goods at the farm and factory gate and is an indicator of future consumer prices, slipped 1.4 percent in May year-on-year, a sharper fall than the 0.7 percent slide in April.