China Inflation Rate at 6-Month Low in July


Consumer prices in China rose 1.8 percent year-on-year in July of 2016, compared to a 1.9 percent rise in June and in line with market consensus. It was the lowest inflation rate since January as the politically sensitive food prices increased by 3.3 percent while non-food cost rose at a slower 1.4 percent. Cost of consumer goods gained 1.4 percent and those of services advanced 2.3 percent.

Among food, prices rose for: fresh fruit (+0.5 percent from  -3.4 percent in June) and tobacco (+0.2 percent from +0.3 percent). Prices of pork also increased by 16.1 percent, down sharply from a 30.1 percent in June. In contrast, cost fell for: fresh vegetables (-4.3 percent from -6.5 percent), eggs (-2.0 percent from +0.3 percent) and milk (-0.4 percent, after remaining unchanged in June).

For non-food categories, cost went up for: education, culture and entertainment (+1.6 percent from +1.4 percent), healthcare (+4.3 percent from +3.8 percent) and other goods and services (+4.4 percent from +2.6 percent). Prices were steady for: clothing (+1.4 percent); rent, fuel & utilities (+1.6 percent) and household equipment supplies and services (+0.6 percent). In contrast, downward prices pressures came from transport and communications (-1.6 percent from -1.8 percent).

For 2016, the government sets inflation target at around 3 percent.

On a monthly basis, consumer prices rose 0.2 percent, after declining 0.1 percent in a month earlier.

The producer prices index dropped by 1.7 percent year-on-year in July, lower than a 2.6 percent decline in June and market expectations of a 2.0 percent fall. It was the smallest decrease since August 2014. The index has been in a negative territory since March 2012.

Statistics China l Rida Husna | rida@tradingeconomics.com
8/9/2016 6:16:30 AM