ZCZC
BCN-20
CHINA-CONSUMER-INFLATION
China’s consumer inflation hits 15-month high, factory prices soften
BEIJING, June 13, 2019 (BSS/Xinhua) – China’s consumer prices rose to the
highest level in 15 months while inflation at the factory gate softened.
Analysts believe inflation will remain in a benign range.
The consumer price index (CPI), a main gauge of inflation, accelerated to
2.7 percent year on year in May, exceeding 2 percent for three consecutive
months, data from the National Bureau of Statistics (NBS) showed Wednesday.
The reading, in line with market expectations, moved up from the 2.5-
percent expansion in April. On a monthly basis, consumer prices remained flat
last month, compared with the 0.1-percent increase in April.
Food prices climbed 7.7 percent year on year last month, up from 6.1
percent in April, with prices of fruits, eggs and pork surging.
“The reduced yields of apples and pears last year, understocks of fruits
and rainy weather in southern China this year caused the price hike of
fruits,” said NBS official Dong Yaxiu.
Fruit prices went up 26.7 percent year on year in May, while on a monthly
basis, the prices increased 10.1 percent, contributing to 0.2 percentage
points to the monthly CPI growth.
The pork price went down 0.3 percent month on month with lower consumption
demands as the weather became hotter. However, compared with a year ago, the
pork price was up 18.2 percent, 3.8 percentage points higher than that in
April.
“We believe the surge in fruit and egg prices will be short-lived and could
subside in summer when supply increases,” said a research note from Nomura.
Nomura predicts that pork prices could rise further due to a sharp decline
in hog stock as a result of the spread of African swine fever, but the
falling weight of pork in the CPI basket could help contain the rise of
headline CPI inflation.
A research team from Huatai Securities also believes that the rising price
of fruits will not consistently push up the CPI as fruits suppliers could
quickly adjust their planting and production.
Wednesday’s data also showed that China’s producer price index, which
measures costs for goods at the factory gate, softened to 0.6 percent year on
year last month, lower than the 0.9-percent growth in April.
On a monthly basis, producer prices went up 0.2 percent in May, narrowing
from the 0.3-percent increase in April, reflecting weaker domestic demand.
“Looking forward, upside risk of CPI may lessen as the low base passes, and
CPI may not be a constraint on monetary policy; meanwhile, PPI may soften
further as external uncertainties persist and industrial profits remain under
pressure,” said a report from China International Capital Corporation
Limited.
China will undertake further stimulus measures to bolster confidence and
stabilize growth in the future, according to Nomura.
BSS/XINHUA/HR/1300