China's consumer inflation stable, factory prices rebound

BEIJING - China's consumer inflation remained generally stable in June under the country's continued efforts toward economic recovery, while factory-gate prices picked up from May as demand warms, official data showed Thursday.

The consumer price index (CPI), the main gauge of inflation, grew 2.5 percent year-on-year last month, expanding from the 2.4-percent gain in May, according to data from the National Bureau of Statistics (NBS).

On a monthly basis, consumer prices went down 0.1 percent. Food prices, which account for nearly one-third of weighting in China's CPI, went up 0.2 percent last month.

In breakdown, pork prices rebounded to climb 3.6 percent from May as supply contracted over factors including declining hog production and pork import, as well as increasing demand from catering industry. Prices of vegetables rose 2.8 percent from May over flood in many regions across China and temporary closure of the Xinfadi farm produce wholesale market in Beijing for COVID-19 control.

Compared with the same period last year, food prices remained a major driver of consumer inflation in June, as its growth rate strengthened from May to 11.1 percent.

Excluding food and energy, the core CPI rose 0.9 percent over last year, down from 1.1 percent in May, according to Dong Lijuan, a senior statistician with the NBS.

The 0.9-percent core CPI growth is a record low, said Wen Bin, chief analyst at China Minsheng Bank, in a co-authored research note.

Food supply and demand is basically balanced amid the recovery of economic activities and government measures to keep prices stable, and consumer prices will be generally steady despite some fluctuations, said Wen.

In the first half of this year, the CPI went up 3.8 percent year-on-year on average.

Thursday's data also showed China's producer price index (PPI), which measures costs for goods at the factory gate, went down 3 percent year-on-year in June, narrowing from the 3.7-percent decrease in May.

On a month-on-month basis, the PPI rose 0.4 percent last month, compared with a 0.4-percent fall in May.

Market demand continued to improve in June, as prices of international bulk commodities rebounded and the domestic manufacturing sector recovered steadily, said Dong.

Prices for oil and natural gas extraction rebounded to surge 38.2 percent from May, while those for the processing of oil, coal and other fuel went up 1.7 percent on a monthly basis.

In the coming months, the CPI is expected to retreat as market supply and demand maintain balance, in hopes of staying within the 3.5-percent annual target by the end of the year, according to Wen.

The tapering consumer inflation will open up room for monetary policy measures to spur the real economy and ramp up support to manufacturers as well as micro, small and medium companies, he said.