China’s June consumer inflation falls short of expectations on weak demand


BEIJING (Reuters) – Chinese consumer prices rose for a fifth straight month in June, but missed expectations, while deflation in producer prices persisted as government support measures fueled a sluggish recovery for the world’s second-largest economy.

Beijing has tried to revive consumption after a stuttering post-COVID recovery, but concerns remain about deeper issues, including a prolonged housing recession and job insecurity, which have dented consumer and industrial activity and fueled calls for more effective policies.

The consumer price index (CPI) rose 0.2% in June from a year earlier, compared with a 0.3% increase in May, the slowest pace in three months, data from the National Statistics Bureau (NBS) showed on Wednesday. That was below the 0.4% increase that economists had forecast in a Reuters poll.

“The risk of deflation has not gone away in China. Domestic demand remains weak,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

Food prices fell even more sharply despite supply disruptions caused by bad weather, indicating weak demand.

Food prices fell 2.1% year-on-year, compared with a 2% decline in May. Notably, fresh vegetable prices fell 7.3%, from 2.3% in May, and the decline in fresh fruit prices deepened to 8.7% from 6.7% in May.

The CPI fell 0.2% month-on-month, compared with a 0.1% decline in May and a worsening from the expected 0.1% decline.

The producer price index (PPI) fell 0.8% in June from a year earlier, down from a 1.4% decline the previous month and matching a forecast decline of 0.8%. The PPI decline was the smallest in 17 months.

(Reporting by Qiaoyi Li and Ryan Woo; Editing by Jacqueline Wong)

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