Explainer | China’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
1. Inflation remains suppressed
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.
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.
“Weak consumer confidence continues to drive consumption in the direction of seeking better value-for-money purchases, and competition in the [electric vehicle] sector continues to drive prices down, suppressing overall inflation,” said Song at ING.
2. Factory-gate prices ease, hit 17-month high
