China's factory-gate inflation grew in May at the fastest year-on-year rate since July 2022, even as consumer inflation remained moderate, adding to signs of strengthening reflation momentum and improving supply-demand dynamics across the industrial sector, experts said on Wednesday.

The latest readings came as fluctuations in global energy prices and a surge of investment in artificial intelligence continued to feed through to the world's second-largest economy, they added.

Looking ahead, experts said that such momentum could underpin a more positive price outlook in the coming months.

Their comments came after data from the National Bureau of Statistics showed that China's producer price index, which measures factory-gate prices, rose 3.9 percent year-on-year in May, accelerating from a 2.8 percent increase in April and marking the third straight month of recovery.

Dong Lijuan, a statistician at the bureau, said the increase in factory-gate inflation in May reflected stronger demand in certain domestic industries and the pass-through effect of fluctuations in international commodity prices.

"The deeper integration of AI with various industries and growing demand for computing power helped push up prices in sectors such as computer-related manufacturing, electrical machinery and nonferrous metals," Dong said.

Echoing that view, Lu Ting, chief China economist at Nomura Securities, said that AI-related fixed-asset investment is expected to contribute 0.3 percentage points to China's GDP growth in 2026.