Chinese inflationary pressures steadied in June, according to data from China’s National Bureau of Statistics (NBS).
From a year earlier, the NBS said consumer price inflation (CPI) rose by 1.5%, a result that was unchanged from May and in line with market expectations.
Despite a recent acceleration, the annual rate still sits well below the 3% level targeted by the People’s Bank of Chin (PBoC).
Prices in urban areas grew by 1.7% over the year, unchanged from May, while those in rural centres increased by a smaller 1.0%, down fractionally on the 1.1% gain reported previously.
Non-food inflation rose by 2.2% over the year, down from 2.3% in May. That was partially offset by a smaller decline in food prices which fell 1.2% over the same period, smaller than the 1.6% drop reported in the 12 months to May.
Pork prices, a staple of the Chinese diet, plummeted 16.7% over the year, accelerating upon the 12.8% decline reported in May. That was offset by an increase in vegetable prices over the same period, helping to explain the smaller decline in overall food prices in June.
“Vegetable prices rose by 5.8% year-on-year in June, ending four consecutive months of deflation since February,” said Wei Li, China economist at the Commonwealth Bank.
Li says that the benign CPI result reinforces his view that the PBoC will keep benchmark one-year interest rates steady at 4.35% this year.
Like consumer prices, factory gate inflation also steadied after sliding in recent months.
The NBS said that producer price inflation rose by 5.5% from a year earlier, unchanged the rate reported from May.
That was bang in line with the median economist forecast and was the first time since February this year that the annual rate didn’t decelerate from a month earlier.
A further deceleration in mining-related costs was offset by faster inflation for manufacturing products, explaining the unchanged June result.