China’s consumer deflation streak persists as price wars rage

China’s consumer deflation extended into a fourth month, as price wars intensified while a spending boost during two national holidays failed to offset the drag from weak domestic demand.

The consumer-price index fell 0.1% in May from a year earlier, the National Bureau of Statistics said Monday, same as the drop in the previous month. The median forecast of economists surveyed by Bloomberg was minus 0.2%.

Factory deflation persisted into a 32nd month, with the producer price index recording a faster drop of 3.3% compared to April.

The threat of entrenched deflation in China will likely linger for months to come as consumers hunker down after a prolonged property slump and companies become mired in price wars. In the latest example of cutthroat competition, carmaker BYD Co. slashed prices by as much as 34% on almost a dozen of its electric and plug-in hybrid models, stoking concerns of another wave of discounting in the EV market.

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