No worries about the level of Chinese inflation in June even though there was a small rise in both consumer and producer price pressures.
After holding steady for two months a rise in food prices pushed the CPI to an annual rate of 1.9% in the year to June from 1.8% in May.
China’s National Bureau of Statistics said food prices rose 0.3% from a year earlier after climbing 0.1% in May. Non-food prices grew 2.2% on year, steady with the annual rate in May.
But on a month to month basis, the CPI eased 0.1% in June from a month earlier. In May, the index fell 0.2% from the previous month.
The producer price index though rose 4.7% in June, compared with May’s 4.1% on-year increase.
The PPI increased 0.3% in June from a month earlier. In May, it edged up 0.4% from the preceding month. Rising oil and energy prices were a major factor.
The tariffs imposed on US imports, especially for soybeans will boost inflation (through food price rises, especially fresh pork, the key fresh food item in China’s CPI) in coming months.
But economists say the People’s Bank of China has enough room to move to soften the blow by relaxing monetary policy, as it did with the cuts to bank reserve ratios last month.
China’s June, second quarter and half year trade data will be out on Friday. Before then bank lending data will be issued later today.
