China’s consumer price inflation rose by 0.2% in June, falling short of expectations as the country’s consumer price index was anticipated to increase by 0.4% year-on-year. The producer price index, measuring factory-gate prices, also dropped by 0.8% from a year ago, aligning with forecasts. Despite the slight rise in core CPI by 0.6% in June, the pace was slower than the first six months of the year, which recorded a 0.7% increase.
Pork prices surged by 18.1% in June, while beef prices fell by 13.4%. Tourism prices rose by 3.7% year-on-year, reflecting a decline from the previous month. Notably, the risk of deflation in China remains a concern, with weak domestic demand hampering growth. Chief economist Zhiwei Zhang of Pinpoint Asset Management emphasized the reliance on exports to drive growth in the first half of the year, with the upcoming release of trade data for June expected to shed more light on the situation.
The challenge of lackluster domestic demand in China continues to impact inflation trends, contrasting with other major economies like the U.S., where prices have remained relatively high. Despite efforts to stimulate economic activity, the risk of deflation lingers, underscoring the need for strategic measures to bolster consumer confidence and spending within the country.
