China's CPI and PPI growth edges down in June as pork, commodity prices fall: NBS
Published: Jul 09, 2021 09:45 AM


China's inflation gauge consumer price index (CPI) rose 1.1 percent in June, while the factory gate prices or PPI surged 8.8 percent, both edging down compared with the growth in May, according to official data released by the National Bureau of Statistics on Friday. 

The country's CPI growth also signaled a temporary end to the trend of inflation rise in China, as CPI growth has been accelerating for four consecutive months since January. In May and April, the CPI rose 1.3 percent and 0.9 percent consecutively. 

On a monthly basis, the CPI edged down by 0.4 percentage points in June, the NBS data showed. 

Dong Lijuan, a senior statistician with the NBS, attributed the main source of CPI slowdown to the fall of food prices, particularly pork. According to the NBS data, the price of pork slumped by 36.5 percent in June, widening 12.7 percentage points compared with the previous month. In general, China's food price has turned from 0.3 percent growth in May to a negative growth of 1.7 percent in June. 

Price factor contributed about 0.31 percentage points to CPI's grow slowdown, Dong said. 

In comparison, China's producer price index (PPI) edged down by a slight 0.2 percentage points compared with May, which is in line with market expectations. The growth fallback is connected to the fall of price growth in a number of industries including chemical materials, oil and natural gas exploration as well as ferrous metal smelting, according to the NBS. 

Previously, China's May factory gate prices have risen at the fastest annual pace in over 12 years due to surging commodity prices, and this made many analysts worried about commodities' price moving up too high, which would eat into manufacturers' profits. 

Tian Yun, vice director of the Beijing Economic Operation Association, said that China's inflation trend would likely to reach its peak by the end of the second quarter, a turn which has already showed signs including the PPI growth turns and the repeated monthly CPI fallback. 

"For one thing, the supply shortage, once trigged by economic shutdowns amid the coronavirus, has started to disappear with the disease under control. For another thing, China's consumption rebound is not as robust as we thought, and domestic demands are relatively weak," he told the Global Times. 

With this trend, the PPI growth is likely to edge down further in the coming months, though the extent of the fallback is hard to predict mainly due to uncertainties in the US Fed policies as well as how the oil price would evolve, he said. 

According to Tian, China's economic momentum throughout the later months this year remains the biggest question, particularly after the US government scales back stimulus policies, which is likely to cause demands to shrink further. But he anticipated that the Chinese government would increase strength of policy support in the second half of this year to prop up the economy, including adopting a more active fiscal policy and increasing currency supply. 

Global Times