China’s consumer price inflation rose by 0.2% in June from a year ago, missing expectations, while producer prices fell in line with forecasts, data from the National Bureau of Statistics showed on Wednesday.
A Reuters poll had anticipated a 0.4% year-on-year increase in the consumer price index (CPI) for June, but the actual rise was only half of that expectation. Core CPI, which excludes more volatile food and energy prices, rose by 0.6% year-on-year, slightly slower than the 0.7% increase observed for the first six months of the year.
The producer price index (PPI), which measures factory-gate prices, fell by 0.8% from a year ago, aligning with expectations. Despite this, concerns about deflation persist as domestic demand remains weak.
"The risk of deflation has not faded in China. Domestic demand remains weak," noted Zhiwei Zhang, chief economist at Pinpoint Asset Management, in a report.
Pork prices surged by 18.1% in June from a year ago, while beef prices dropped by 13.4%. Additionally, tourism prices increased by 3.7% year-on-year in June, down by 0.8% from May.
China’s retail sales of consumer goods rose by 3.7% year-on-year to 3,921.1 billion yuan in May 2024, according to data released by the National Bureau of Statistics on June 17. From January to May, the total retail sales of consumer goods nationwide reached 19,523.7 billion yuan, marking a 4.1% year-on-year increase.
Zhang emphasized the need for China to rely on exports to support growth in the first half of the year. The country is scheduled to release trade data for June on Friday.
While China's inflation remains low due to lackluster domestic demand, this contrasts with major economies like the U.S., where prices have stayed elevated.
