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China’s consumer inflation picks up in June

Downward pressure on prices abated in the world’s second-largest economy. That’s according to the latest data released on July 9 by China’s National Bureau of Statistics.

Inflation in China picked up in June, with the month’s Consumer Price Index standing at 1.4%. That’s in the upper range of previous expectations, and higher than May’s 1.2%. Food prices dropped in the month. Such categories such as fruit, eggs and vegetables all posted month-on-month drops due to seasonal factors. However, the index was sustained by a three-month increase in pork prices. Economists say the pick up in inflation shows positive momentum but still represents pressure for the year. That’s because June was the 10th consecutive month for inflation to stand below 2%.

“From what we are looking at, it is estimated that CPI for the whole year will stand at around 2%. This is lower than our expectations. There is more room to boost demand in this country,” Liu Yongchun, deputy dean of dept. of economics, Renmin university, said.

Growth in China’s June producer prices was still within negative territory. The PPI dropped 4.8% year-on-year, the extent of which widened compared to May. Experts say the index was pushed down by a fall in major commodities prices as industrial activities slowed. Some experts are calling for more policy supports to buck the trend.

“This situation provided room for further expansionary monetary policy measures this year,” Pan Xiangdong, chief economist with Galaxy Securities, said.

The National Bureau of Statistics is expected to issue a range of China’s half year economic indexes, including the GDP, next week.