The ex-factory price of China's industrial products rose 1.3 per cent in June compared with a year ago, the National Bureau of Statistics said on Friday.

The ex-factory price, which measures prices at the factory gate, slowed from a 2 per cent growth in May because of a drop in international oil prices, the bureau said in a statement.

For the first six months, the ex-factory price rose year-on-year by 2.9 per cent, the bureau said.

Following the end of the US-led war on Iraq, international oil prices dropped and the growth of oil prices on the domestic market also slowed down, the bureau said.

Domestic crude oil prices rose year-on-year by 10.4 per cent in June, which was 10.5 percentage points lower than in May.

Gasoline prices rose year-on-year 8.2 per cent during June, 2.6 percentage points less than in May.

Diesel prices increased year-on-year by 8.8 per cent, 3.1 percentage points less than in May, the bureau said.

Wang Zhao, a researcher with the State Council's Development Research Centre, said the easing in ex-factory prices is also a result of the government's measures to control price rises after the SARS (severe acute respiratory syndrome) outbreak.

Prices of consumer durables fell 4.2 per cent in June and those of daily consumer goods fell 0.5 per cent, the bureau said.

Pharmaceutical prices fell 0.3 per cent, it said.

The ex-factory prices of industrial products, as well as purchasing prices for raw materials, fuel and energy were important indicators for the consumer price index (CPI), the key inflation measurement used by Chinese policy-makers.

China's CPI rose year-on-year by 0.3 per cent in June, but rose 0.7 per cent in May, the bureau reported.

For all of 2003, the CPI is expected to rise 1 to 1.2 per cent, said Qi Jingmei, a senior economist with the State Information Centre.

"The higher oil prices and the central bank's moves to boost money supplies will keep the CPI at a higher level," she said.

But the country would not suffer from inflation, she added.

"The majority of Chinese-made products suffered an oversupply, despite the great efforts the government has made to cut over-production," she said.

Meanwhile, there were no major factors which could drive the CPI further, apart from the possibility that the government may raise electricity prices in the second half of this year, she said.

The prices for major consumer goods including cars and houses all dropped, she said.

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