The consumer price index (CPI), a main gauge of inflation, increased 2.5 percent year on year in May, up from 1.8 percent in the previous month, according to the National Bureau of Statistics (NBS).

Kuang Xianming, Director of the Research Center for the Economy at the China Institute for Reform and Development (CIRD), highlighted a positive change in the CPI data.

"A notable change is that the CPI reversed the month-on-month decline recorded for the previous two months, signaling that the endogenous power of the economic growth is increasing," Kuang said.

China's producer price index (PPI) contracted 1.4 percent year on year in May, following a 2-percent decline in April, said the NBS.

Both the year-on-year and month-on-month decreases narrowed from those in the previous month, signaling rebounding market demand in industrial products, said Yu Qiumei, a senior statistician with the NBS.

The index, which measures inflation at the wholesale level, has been in deflationary territory for 27 consecutive months, the longest drop since the 1990s.