China’s Consumer Prices Rise but Miss Expectations in June

Consumer prices in China increased for the fifth consecutive month in June but fell short of expectations, while producer prices continued to show deflationary trends.

Despite government support measures aiming to kickstart the economy, China faces challenges related to a housing downturn and job insecurity, which have impacted consumer and industrial activities, prompting calls for more effective policies.

According to data from the National Bureau of Statistics (NBS), the consumer price index (CPI) rose by 0.2% year-on-year in June, marking the slowest growth in three months and below the 0.3% increase in May, while economists polled by Reuters had predicted a 0.4% increase.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, highlighted concerns about persistent deflation risks in China due to weak domestic demand.

Food prices, despite supply disruptions from adverse weather conditions, experienced a 2.1% decline year-on-year in June, compared to a 2% drop in May. This decline was particularly notable in fresh vegetable prices, which plummeted by 7.3%, and fresh fruit prices, which fell by 8.7%.

On the other hand, the producer price index (PPI) decreased by 0.8% year-on-year in June, which was less severe than the 1.4% decline in the previous month and aligned with expectations of a 0.8% fall. This marked the smallest drop in the PPI in 17 months.