Chinese consumer price inflation ebbed in July, rising by the slowest amount seen since January.
According to China’s National Bureau of Statistics (NBS), consumer prices rose by 1.8% from July last year. The increase was in line with market expectations, but marginally softer than the 1.9% pace seen in June.
By component, food inflation continued to slow, rising at an annual rate of 3.3% from 4.6% in June. Falling pork prices — a staple of the Chinese diet — largely explained the deceleration, falling from an annual pace of 30.1% in June to 16.1% in July.
Partially offsetting the deceleration in food price inflation, non-food inflation accelerated, rising 1.4% from the levels of a year earlier. Not only was this higher than the 1.2% pace seen in June, it marked the fastest year-on-year increase seen in over a year.
By location, consumer prices rose by 1.8% in urban areas over the past year, marginally ahead of the 1.5% increase seen in rural areas.
Though consumer prices came in bang-on expectations, there was better news on upstream price pressures with producer price deflation weakening far quicker than markets had expected.
Compared to a year earlier, prices fell by 1.7%, a figure that was an improvement on the 2.6% contraction seen in June and forecasts for a decline of 2.0%.
While prices have now fallen for 53 consecutive months, the year-on-year decline was the smallest seen since August 2014.
On that score, deflationary pressures caused by lower commodity prices and severe overcapacity in some industries appears to be ebbing.
The annual pace of deflation has now fallen every month since the beginning of the year. That, at least based on the figures presented, fits with the recent surge in raw materials prices, driven in part by government measures to shutter obsolete and uneconomic output and heightened levels of speculation in futures markets.
There has been no discernible reaction to either release, suggesting that Chinese data — at least for the moment — is not a consideration for investors.