China’s CPI Falls 0.1% in May as Consumer Goods Weaken, Services Remain Resilient
China’s Consumer Price Index (CPI) fell by 0.1% year-on-year in May 2025, according to data released by the National Bureau of Statistics, signaling ongoing deflationary pressure in consumer markets. The urban CPI remained flat, while rural areas recorded a 0.4% decline.
Food prices fell 0.4%, while non-food prices remained unchanged. Consumer goods prices dropped 0.5%, but this was partially offset by a 0.5% rise in service prices, highlighting a diverging trend between goods and service-related inflation.
On a month-over-month basis, CPI fell 0.2%, with both urban and rural areas posting equal declines. Food and non-food prices each decreased by 0.2%, while consumer goods prices dipped 0.3%. Service prices were unchanged from April.
Category Highlights – Year-on-Year Changes:
- Food & Tobacco: -0.2%
- Clothing: +0.6%
- Healthcare: +0.1%
- Education, Culture & Entertainment: +0.1%
- Other Goods & Services: +0.7%
- Living Goods & Services: -0.8%
- Transportation & Communication: -1.2%
- Housing: Stable
The data reflects persistent weakness in consumer demand, especially in goods-related categories, despite moderate growth in services.
Data Source: https://www.stats.gov.cn/sj/zxfb/202506/t20250609_1960094.html
China’s Retail Sales Rise 6.4% in May, Online Sales Remaining Key Growth Driver
China’s total retail sales of consumer goods reached CNY 4.13 trillion (approximately USD 570 billion) in May 2025, up 6.4% year-on-year, according to data released by the National Bureau of Statistics. Excluding automobiles, retail sales rose by 7.0% to CNY 3.73 trillion (approximately USD 515 billion), reflecting solid domestic consumption momentum.
From January to May, cumulative retail sales totaled CNY 20.32 trillion (approximately USD 2.80 trillion), marking a 5.0% increase compared to the same period last year. Sales of non-automotive consumer goods rose 5.6% to CNY 18.43 trillion (approximately USD 2.54 trillion).
In May:
- Urban retail sales totaled CNY 3.61 trillion (USD 499 billion), up 6.5%
- Rural retail sales stood at CNY 526.9 billion (USD 72.9 billion), up 5.4%
- Goods retail sales rose 6.5% to CNY 3.67 trillion (USD 508 billion)
- Catering revenue grew 5.9% to CNY 457.8 billion (USD 63.4 billion)
China’s online retail sector remained a bright spot, with online retail sales reaching CNY 6.04 trillion (USD 834 billion) in the first five months—an 8.5% year-on-year increase.
- Online sales of physical goods rose 6.3% to CNY 4.99 trillion (USD 688 billion), accounting for 24.5% of total retail sales.
The data points to broad-based recovery in consumer spending, with online platforms and food-related categories leading the growth.
Data Source: https://www.stats.gov.cn/sj/zxfb/202506/t20250616_1960169.html
China’s Real Estate Investment Falls 10.7% in Jan–May, Sales and Inventory Also Decline
China’s property market continued to face significant headwinds through the first five months of 2025. According to data released by the National Bureau of Statistics (NBS) on June 16, real estate development investment totaled CNY 3.62 trillion (approximately USD 499 billion) from January to May, marking a year-on-year decline of 10.7%, with the contraction widening by 0.4 percentage points compared to the first four months. Residential investment fell by 10.0% to CNY 2.77 trillion (approximately USD 382 billion).
During the same period, sales of newly built commercial properties also remained weak.
- Total floor area sold reached 353.15 million square meters, down 2.9% year-on-year.
- Residential floor area sold declined 2.6%.
- Total property sales revenue fell 3.8% to CNY 3.41 trillion (approximately USD 470 billion).
- Residential sales revenue decreased 2.8%.
As of the end of May, unsold commercial housing inventory stood at 774.27 million square meters, 7.15 million square meters less than at the end of April, reflecting modest destocking. Unsold residential inventory declined by 4.39 million square meters.
In addition, the Real Estate Development Climate Index (REDCI), or “Guofang Climate Index,” dropped to 93.72 in May, further highlighting the sector’s continued sluggish sentiment.
The sustained decline in both investment and sales underscores the ongoing adjustment in China’s property market.
Data Source: https://www.stats.gov.cn/sj/zxfb/202506/t20250616_1960170.html
China’s Auto Giants Pledge 60-Day Supplier Payments in Industry-Wide Reform Effort
In a coordinated move that could reshape supplier relations across China’s automotive sector, ten major automakers—including FAW, Dongfeng, GAC, Seres, BYD, Geely, Chery, XPeng, Great Wall, and Changan—have jointly pledged to standardize supplier payment terms to within 60 days.
The announcements, made across June 10–11, mark a rare moment of industry-wide alignment and have been widely interpreted as an effort to improve cash flow across the automotive supply chain, reduce financial strain on upstream partners, and address long-standing criticisms of delayed payments.
While the initiative has drawn widespread praise on Chinese social media, questions remain over how enforceable the 60-day term will be in practice. Many netizens expressed concern over loopholes that could be used to delay payments despite the headline promise.
Key questions include:
- When does the 60-day clock start—upon contract signing, invoicing, delivery, or acceptance inspection?
- What form will payments take—cash or commercial bills. Only BAIC and SAIC have committed not to use commercial bills.” ?
- Will penalties exist for noncompliance?
Critics argue that without clear definitions and accountability mechanisms, the policy risks becoming symbolic rather than substantive.
For China’s top-tier automakers with robust financing capabilities, this shift may pose minimal disruption. In fact, shorter payment cycles could help strengthen supplier loyalty and stabilize production, offering a competitive edge in a supply-constrained market.
However, the burden may be far heavier for smaller players and EV startups, many of whom rely on stretching payables to manage cash flow. Just days prior to the announcement, one new-energy automaker was reported to be in arrears to suppliers for over six months. For these firms, the new industry standard may prove unsustainable—potentially accelerating market exits and consolidation.
According to industry estimates, Chinese auto suppliers are collectively owed over CNY 1 trillion (approximately USD 138 billion) in unpaid invoices annually. If uniformly enforced, a 60-day payment policy could inject that volume of working capital back into the real economy, offering a significant boost to liquidity, investment, and operational resilience across the automotive value chain.
Despite the practical uncertainties, the coordinated move signals a cultural shift within the industry. After years of opaque practices and supplier-side financial pressure, this effort—if followed through—could represent a turning point in how China’s automakers manage their financial obligations.
Starbucks China Cuts Prices for the First Time in 25 Years, Shifts Focus to Non-Coffee Growth
Starbucks China has announced its first major price adjustment in 25 years, lowering prices across its non-coffee product lineup in a move aimed at expanding its consumer base and fueling growth beyond its core coffee business. Beginning June 10, dozens of beverages in the Frappuccino, Shaken Tea, and Tea Latte categories will feature new summer promotional prices, with large-sized drinks receiving an average discount of approximately CNY 5 (around USD 0.69).
The pricing initiative is part of Starbucks’ all-day consumption strategy—offering coffee-centric options in the morning and promoting non-coffee beverages in the afternoon. Rather than engage in price wars in an increasingly competitive coffee market, Starbucks is shifting focus to the fast-growing non-coffee segment, where younger consumers are gravitating toward customizable, interactive drink experiences.
To support this shift, Starbucks will launch a collaboration with Disney’s Zootopia on June 17. Paired with greater customization options—such as adjustable sweetness levels and flavor base additions—the brand aims to appeal to Gen Z customers who value personalization and creativity. These offerings are intended to transform mass-market beverages into lifestyle expressions, further strengthening Starbucks’ identity as a “third space” beyond home and work.
Amid fierce price competition from domestic rivals like Luckin Coffee and the encroachment of new-style tea brands into the coffee space, such as Heytea and Chagee, Starbucks’ strategy marks a clear effort to differentiate. By holding coffee prices steady while cutting non-coffee prices, the company aims to preserve its premium brand positioning while reducing the entry barrier for new and casual consumers.
Chief Growth Officer Yang Zhen described the strategy as a “restrained and blank” approach—creating space for habit formation and enhancing user engagement through pricing flexibility, all while maintaining the brand’s high-end image.
As China’s beverage market becomes more segmented and experience-driven, Starbucks’ shift may serve not only to protect its leadership position but also to define a new growth narrative centered around personalized, non-coffee offerings.