China’s Consumer Inflation Rises Least in Four Months in June on Cheaper Food
Zhu Yanran
DATE:  Jul 10 2024
/ SOURCE:  Yicai
China’s Consumer Inflation Rises Least in Four Months in June on Cheaper Food China’s Consumer Inflation Rises Least in Four Months in June on Cheaper Food

(Yicai) July 10 -- China’s consumer prices rose at the slowest pace in four months in June, missing expectations, mainly as a result of the falling cost of foodstuffs.

The consumer price index rose 0.2 percent last month from a year earlier, increasing for a fifth straight month, according to data released by the National Bureau of Statistics today. That fell short of market expectations for a 0.4 percent gain.

The CPI had gained 0.3 percent in May and April, 0.1 percent in March, and 0.7 percent in February, after a 0.8 percent fall in January.

Food prices declined for the 12th month in a row, dropping 2.1 percent, which was 0.1 percentage point faster than in May. The seasonal cost of vegetables fell, offsetting a jump in pork prices around the Dragon Boat Festival. A slowdown in energy price gains and an accelerated decline in auto prices also led to weak upward pressure on non-food prices, the NBS noted.

The year-on-year rise in pork prices is unlikely to last this month, said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International. But the decline in vegetable and fruit prices is expected to narrow, Wang added. 

Over the course of the school holidays this summer, service prices are likely to rise significantly month on month, Wang noted. But the higher baseline a year ago may limit the increase, Wang said, adding that the CPI will remain at a relatively low level this month.

The CPI will continue to recover moderately, judging from the trend in food, industrial consumer goods, and services prices so far, NBS spokesperson Liu Aihua said at a recent press conference given by the State Council Information Office.

The CPI is recovering thanks to government policies to release consumption demand and the effect of low year-earlier base figures, according to a report by Peking University's China Center for Economic Research, which predicted that inflation will rise about 0.6 percent this year.

Factory-gate prices fell last month by the least since January 2023 due to international commodity price fluctuations and insufficient demand for some domestic industrial products, the NBS said.

The producer price index dropped 0.8 percent in June from a year earlier, compared with a 1.4 percent decline in May. That was in line with market forecasts.

The easing pace of the decline was mainly due to the low base effect, according to Zhang Yu, chief macroeconomic analyst at Hua Chuang Securities.

Large-scale equipment renewals and the government’s trade-in policy on consumer goods are gradually showing through, which will give price support to some sectors, Liu pointed out. Coal prices also may keep rising on peak summer demand for electricity, he noted, adding that the PPI's year-on-year decline may go on narrowing.

Editors: Xu Wei, Martin Kadiev

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Keywords:   CPI,PPI