Inflation in China continued to slow in June as the rapid rise in food prices – especially pork – eased. But the country’s trade minister was all doom and gloom about the outlook for trade and the global economy at a meeting of Group of 20 trade ministers (minus Australia) on Saturday.
Data released yesterday showed that China’s consumer inflation grew at its slowest pace since January, rising an annual 1.9% from may and well under the 2.3% annual rate seen in February, March and April and 1% in May.
Some analysts claimed the slowing in inflation has raised the chances of more stimulus, but the Chinese government will be reluctant to do more after spending tens of billions of dollars late last year and earlier this eyar to encourage activity in the property sector.
Consumer inflation remains low compared with the official target of around 3% for 2016, while produce prices remain in deflation, though off their deep lows of earlier in the year.
The CPI grew 2.1% in the first half of 2016, while the annual target is around 3%. On a month-on-month basis, the CPI eased 0.1% in June.
Food prices were up 4.6% in June, down from a 5.9% rise in May. Pork prices were up 30% from a year ago, slowing from a 33% rate in May.
Non-food prices inched up 1.2% against May’s 1.1% rise.
Producer price index (PPI) dropped 2.6% from a year earlier in June, better than the 5.9% rate last November.
But the fall means producer prices have now fallen for 51 consecutive months.The PPI eased 2.8 percent in May.
China is due to release its second-quarter gross domestic product (GDP) data this Friday, July 15, along with figures for June’s industrial output, investment and retail sales. Trade data for June and the first six months of the year will be out on Wednesday.
Meanwhile a speech on Saturday by China’s trade minister Gao Hucheng to G-20 trade ministers was unusually gloomy.
He said the global economic situation is grim and the world’s major economies must lead the way in tackling problems including sluggish growth and weak trade, according to a report on Xinhua.
“Global trade is dithering, international investment has yet to recover to levels before the financial crisis, the global economy has yet to find the propulsion for strong and sustainable growth, he said (according to newsagency reports of the speech).
"In the current circumstances, the international community expects the G20 to show leadership in resolving the prominent problems we are facing and inject impetus for recovery and growth," he said.
The World Trade Organization (WTO) expects 2016 to be the fifth consecutive year of less than 3% growth in global trade, and Director-General Roberto Azevedo said on Friday trade would remain sluggish going into the third quarter of the year.
“The bigger context of course is there has been a very sharp reduction in trade growth,” he said. “We heard from the WTO today that it has been well below the rates of GDP growth, which are in any case fairly depressed,” he said.
