The yearly pace of consumer prices rose 2.5 per cent in May, just more than anticipated and up from 1.8 per cent in April.
Overall, consumer prices remain benign. This is only the highest reading since January, and the government's inflation target is 3.5 per cent.
Price gains are limited in part because the government is cooling the housing market.
But prices of food jumped in April, accounting for the small surprise. Food prices were up 4.1 per cent from a year ago, versus just 2.3 per cent from a month earlier.
Producer prices, meanwhile, remained in deflationary territory for a 27th consecutive month. However, the fall in prices was much slower than a month earlier. The PPI showed a 1.4 per cent fall, versus -2.0 per cent in April.
The deflationary picture for producers reflects weak demand, owing to "rampant overcapacity in sectors including steel and cement, which is keeping down prices of raw materials," said analysts at Moody's Analytics. They added:
The government's 'mini-stimulus' in boosting rail investment will assist in turning things around through this year and next.