A citizen buy vegetable at a market in Nanchang, capital of east China's Jiangxi Province, June 9, 2012. China's consumer price index (CPI), a main gauge of inflation, slowed to 3.0 percent year-on-year in May, the National Bureau of Statistics (NBS) said Saturday. It marked a 17-month-low, easing from April's 3.4 percent and 3.6 percent in March. (Xinhua/Zhou Ke)

Slowing CPI is much expected as the central bank Thursday announced the first interest rates cut since December 2008 to tackle the slower-than-expected the world's second largest economy.

After the cut, the one-year deposit interest rate will fall to 3.25 percent while the loan interest rate will be lowered to 6.31 percent.

The National Development and Reform Commission (NDRC), the economic planning agency, Friday announced the second price cut of gasoline and diesel in a month in response to lower crude prices on the global market.

The adjustments will lower the benchmark retail price of gasoline by 0.39 yuan per liter and diesel by 0.44 yuan per liter.

Inflation may drop below 2 percent if fuel prices continue to fall, said Xiang Yue, an analyst with Great Wall Securities.

Liu Yuanchun estimated the annual CPI would stand at around 3.2 percent, and the monthly reading could fall below 3.0 percent.