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China’s consumer inflation sees stable expansion, factory prices weaken
BEIJING, July 11, 2019 (BSS/Xinhua) – China’s consumer prices continued
stable growth while inflation at the factory gate weakened. Analysts believed
that inflationary pressure may not be a constraint on monetary policy.
The consumer price index (CPI), a main gauge of inflation, rose 2.7
percent year on year in June, the same expansion as that of May, the National
Bureau of Statistics (NBS) said Wednesday.
The reading, in line with market expectations, edged down 0.1 percent last
month on a monthly basis.
For the first half of this year, CPI increased 2.2 percent compared with
the same period last year, according to the NBS.
Food prices grew 8.3 percent year on year last month, up from 7.7 percent
in May. However, the prices dropped 0.3 percent on a monthly basis.
In June, prices of fruits hit a record high by climbing 42.7 percent from
a lower base last year.
On a monthly basis, the prices were up 5.1 percent, contributing 0.11
percentage points to monthly CPI growth.
NBS official Dong Yaxiu said price hikes of certain fruits resulted from
the heavy precipitation in southern areas which affected the picking and
transportation.
The price of pork expanded 3.6 percent month on month due to tight supply.
Asian financial service group Nomura said the rise of food price inflation
was mainly driven by fruit prices.
“We expect the surge in fruit prices to be short-lived and could subside
in coming months when the supply increases,” said a research note from
Nomura.
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Pork prices, on the other hand, could rise further due to a sharp decline
in hog stock from the spread of African swine fever, but wouldn’t exert much
pressure on the central bank’s easing stance, Nomura said.
China International Capital Corporation Limited (CICC) projected that
rising food prices might not push headline CPI to stay above the government’s
2019 target of 3 percent for an extended period of time.
“Looking forward, the low base that’s been driving up CPI shall pass by
August, which may lessen the upside risk of CPI,” CICC said in a report.
Wednesday’s data also showed that China’s producer price index, which
measures costs for goods at the factory gate, rose 0.3 percent year on year
in the first half of 2019.
In June, the index was flat with the same period last year, according to
the NBS.
On a monthly basis, producer prices went down 0.3 percent in June,
compared with the 0.2-percent growth in May.
“The PPI may turn negative as the base rises in the third quarter,” CICC
said.
However, the recent tightening over environment protection protocol in
northern China may help support certain upstream domestic prices in the near
term, it added.
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