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China inflation
EconomyEconomic Indicators

ExplainerChina’s consumer inflation edges down, but ‘upside’ around the corner: 4 takeaways from June

  • China’s consumer price index edged down to a three-month low in June, while the producer price index hit a 17-month high

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China’s producer price index (PPI) – which measures the cost of goods at the factory gate – slipped by 0.8 per cent last month. Photo: Reuters
Andrew Mullen
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1. Inflation remains suppressed

China’s consumer price index (CPI), a key gauge of inflation, grew in June by 0.2 per cent, year on year, edging down to a three-month low following an increase of 0.3 per cent in May, though the gauge remained in positive territory for the fifth consecutive month
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The reading fell short of expectations, with analysts at Capital Economics pointing to deepening food-price deflation.

“Pork prices rose sharply, but the prices of fruits and vegetables both fell, which pulled down overall food inflation,” they said, adding that energy-price inflation also eased.

Non-food inflation continued to see drags from several categories, including vehicles, household appliances and communications devices, while rents also fell further into negative territory, said Lynn Song, chief economist for Greater China at ING.

Services inflation, meanwhile, saw its year-on-year growth pace slow to 0.7 per cent in June from 0.8 per cent in May.

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On a month-by-month basis, China’s CPI remained negative by falling 0.2 per cent in June following a 0.1 per cent decrease in May, according to the NBS.

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