(Yicai Global) July 9 -- China's consumer price index, a main gauge of inflation, rose 2.5 percent last month from a year earlier, 0.1 percentage point more than in May, as the cost of food was driven up by growing demand, widespread flooding and a brief resurgence of Covid-19 cases in Beijing.

Food prices jumped 11.1 percent last month, compared with a 10.6 percent rise in May, accounting for 2.24 percentage points of the growth in the CPI, the National Bureau of Statistics said today.

The cost of fresh vegetables rose 2.8 percent against a 12.5 percent drop in May, said Dong Lijuan, a senior statistician at the urban surveys department of the NBS. Pork prices gained 3.6 percent, compared with a decline of 8.1 percent the month before, thanks to a rebound in catering, he added.

What consumers pay for food should be stable throughout the year, Meng Wei, spokesperson of the National Development and Reform Commission, said last month. The prices of vegetables and fruits will have normal seasonal fluctuations. China has sufficient grains and edible oils and this will keep prices steady, he added.

Core inflation -- the CPI for all items except food and energy -- edged up 0.9 percent from a year earlier, 0.2 percentage point lower than in May.

PPI Decline Slows

The producer price index, a gauge of industrial profitability, rose 0.4 percent in June from May, but was down 3 percent from a year earlier, indicating that the adverse impact of the novel coronavirus on prices of manufactured goods waned in the second quarter.

May’s PPI had seen a 0.4 percent drop from the previous month and a 3.7 percent fall from a year earlier.

PPI deflation has slowed thanks to the country’s increased countercyclical policies and continued environmental protection restrictions on production, Wu Ge, chief economist at Changjiang Securities, told Yicai Global. This has caused the price of industrial products to be unusually high in off-season.

The PPI’s monthly decline will continue to slow in the second half as the market recovers, said Guosheng Securities. The PPI has hit its lowest point and will gradually pick up from now on, it added. It is unlikely to expand significantly given the large volume of goods in stock.

Editor: Kim Taylor