China inflation steady in June

BEIJING: China’s factory gate prices stabilised in June after slowing for three straight months, official data showed on Monday, but analysts expect weakening economic growth will continue to weigh on inflation.

The producer price index rose 5.5 per cent from a year ago, the National Bureau of Statistics said, unchanged from May and in line with a Bloomberg News estimate.

After hitting an eight-year high of 7.8 per cent in February, the pace of growth in producer prices has slowed as Beijing puts the brakes on freewheeling credit as fears of a financial crisis grow.

Consumer prices, a gauge of retail inflation, rose 1.5 per cent in June from a year earlier, slightly below analyst expectations of 1.6 per cent but steady compared with May.

“With slowing credit growth likely to weigh on economic activity in coming quarters we think that, volatility in food prices aside, inflation still has further to fall,” said Julian Evans-Pritchard, China economist at Capital Economics.

Tighter restrictions on China’s real estate market and bank lending are expected to drag on the world’s second largest economy, reducing demand for raw materials and weighing on prices.

“It’s all about PPI and it’s all about how long until PPI is negative year-on-year again,” said Michael Every, head of financial markets research at Rabobank Group in Hong Kong.

“This month is surely just a holding action in that regard.” — AFP

BEIJING: China’s factory gate prices stabilised in June after slowing for three straight months, official data showed Monday, but analysts expect weakening economic growth will continue to weigh on inflation.

The producer price index (PPI) rose 5.5 per cent in June from a year earlier, the National Bureau of Statistics (NBS) said on Monday. This was in line with analyst forecasts and unchanged from the previous month.

Prices of raw materials are making a modest recovery, helped by stronger futures prices in China over the past few weeks, after an earlier hit taken from a broader cooling in economic activity since March. China’s June consumer prices rose 1.5 per cent from a year earlier, in line with market expectations and May’s reading, the NBS said, with food prices continuing their declines albeit at a slower pace.

There are some concerns among analysts that price pressures could weaken throughout the rest of the year as economic fundamentals soften.

“The upshot is that, having eased in previous months, price pressures appear to have stabilised in June,” Julian Evans-Pritchard from Capital Economics in Singapore wrote in a note.

“Nonetheless, with slowing credit growth likely to weigh on economic activity in coming quarters we think that, volatility in food prices aside, inflation still has further to fall. This will disappoint those hoping for a sustained period of reflation that could help to erode corporate debt burdens.”

— Reuters

Food prices, the biggest component of the consumer price index, fell at a slower 1.2 per cent from the previous year, after sliding 1.6 per cent in May and 3.5 per cent in April.

“Falling food prices can be attributed to a high build-up of food reserves and seasonal factors,” Zhu Baoliang, chief economist at the State Information Center (SIC), said, according to a story published on Monday in China’s Financial News newspaper, affiliated with the People’s Bank of China (PBOC).

Tepid inflation comes despite signs of a pickup in factory activity. China’s manufacturing sector expanded at the quickest pace in three months in June, buoyed by strong production and new orders.

Meanwhile, spot iron ore and construction steel prices have risen as investors continued to focus on China’s capacity cutbacks and industrial upgrade in the steel sector.

“High margins after the government’s effort to eliminate low-grade steel are enticing mills to produce more steel, which increases the need for iron ore,” said Zou Mingdong, Shanghai-based steel manager at Zhongcai Merchants Investment Group.

“However, the rising price doesn’t change the fundamental situation of oversupply and weak demand.”

China’s biggest steel maker, Baoshan Iron & Steel , cut its main steel products prices for May and June after a long series of increases.

On a month-on-month basis, the PPI fell 0.2 per cent in June.

China is targeting economic growth of around 6.5 per cent this year and inflation of 3 per cent. Chinese Premier Li Keqiang said in a speech at the World Economic Forum that China is capable of achieving its full-year growth target and controlling systemic risks despite challenges.

(Reporting by Sue-Lin Wong; Editing by Sam Holmes)

China’s producer prices and inflation maintain flat pace in June

Beijing (dpa) - China’s producer prices and consumer inflationmaintained a flat pace in June, official data showed Monday.

The producer price index, which reflects the costs of goods at thefactory gate, rose 5.5 per cent year-on-year in June, the same paceas in May, China’s National Bureau of Statistics (NBS) said.

Meanwhile, the consumer price index, a main gauge of inflation, saw a1.5 per cent year-on-year rise in June, also the same pace as in May.

Analysts attribute the low inflation to declining food prices.

# Notebook

## Internet links- [National Bureau of Statistics data](http://dpaq.de/jMS7j)

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## Editorial contacts- Reporting by: Simina Mistreanu in Beijing- Editing by: Peter Godfrey, +61 2 9322 8064,

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China inflation steady in June

Beijing, July 10, 2017 (AFP) - China’s factory gate prices stabilised in June after slowing for three straight months, official data showed Monday, but analysts expect weakening economic growth will continue to weigh on inflation.

The producer price index rose 5.5 per cent from a year ago, the National Bureau of Statistics said, unchanged from May and in line with a Bloomberg News estimate.

After hitting an eight-year high of 7.8 per cent in February, the pace of growth in producer prices has slowed as Beijing puts the brakes on freewheeling credit as fears of a financial crisis grow.

Consumer prices, a gauge of retail inflation, rose 1.5 per cent in June from a year earlier, slightly below analyst expectations of 1.6 per cent but steady compared with May.

“With slowing credit growth likely to weigh on economic activity in coming quarters we think that, volatility in food prices aside, inflation still has further to fall,” said Julian Evans-Pritchard, China economist at Capital Economics.

Tighter restrictions on China’s real estate market and bank lending are expected to drag on the world’s second largest economy, reducing demand for raw materials and weighing on prices.

“It’s all about PPI and it’s all about how long until PPI is negative year-on-year again,” said Michael Every, head of financial markets research at Rabobank Group in Hong Kong.

“This month is surely just a holding action in that regard.”

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