Chinese consumer price inflation ticked higher in June with an annual increase of 1.4% reported. The figure, 0.2% higher than May, was ahead of expectations for an increase of 1.3%.
Food price inflation rose 1.9% from a year earlier, led by a 7.0% increase in pork prices, while non-food inflation accelerated to an eight-month high of 1.2%.
In May increases of 1.6% and 1.0% respectively were recorded.
While consumer price inflation increased modestly it was a completely different story for upstream price pressures.
Producer price deflation accelerated to 4.8% from 4.6% in May. Not only was the decline below expectations for an improvement to 4.5%, the speed of decline was the fastest seen since February 2015.
Given recent declines in commodity prices, the deflationary pressures seen over the past three years look unlikely to dissipate anytime soon.
Despite the uptick in CPI in June it is clear that price pressures across the country remain incredibly subdued. If China’s central bank, the PBOC, sees the needs to loosen monetary policy further, there is nothing in this report to prevent them from doing so.