China's factory deflation steepens as demand wanes

Factories get less for their goods from key markets amid fastest decline in 7 years

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BEIJING - China's factory gate prices fell at the fastest pace in seven years in May and quicker than forecasted, as faltering demand weighed on a slowing manufacturing sector and cast a cloud over the fragile economic recovery.

As rising interest rates and inflation squeeze demand in the United States and Europe, China is in contrast battling a sharp decline in prices, with factories receiving less for their products from key overseas markets.

The producer price index for May fell for an eighth consecutive month, down 4.6 per cent, the National Bureau of Statistics said on Friday.

That was the fastest decline since February 2016 and bigger than the 4.3 per cent fall in a Reuters poll.