Published 08:06 IST, July 10th 2024
China's consumer prices rise, but recovery remains fragile
Food prices declined further despite supply disruptions caused by adverse weather, highlighting weak demand.

Consumer prices rise: China's consumer prices rose for the fifth consecutive month in June, but the increase fell short of expectations, while deflation in producer prices continued, indicating ongoing challenges in the world's second-largest economy. Despite government measures to stimulate growth, issues like a prolonged housing downturn and job insecurity are hampering recovery efforts.
The consumer price index (CPI) increased by 0.2 per cent year-on-year in June, compared to a 0.3 per cent rise in May, marking the slowest pace in three months. This was below the 0.4 per cent rise anticipated by economists polled by Reuters, according to data released by the National Bureau of Statistics (NBS) on Wednesday.
"The risk of deflation has not faded in China. Domestic demand remains weak," commented Zhiwei Zhang, chief economist at Pinpoint Asset Management.
Food prices, which are a significant component of the CPI, declined further despite supply disruptions caused by adverse weather, highlighting weak demand. Year-on-year, food prices fell 2.1 per cent, following a 2 per cent drop in May. Fresh vegetable prices saw a notable decrease of 7.3 per cent, compared to a 2.3 per cent decline in May, while fresh fruit prices fell by 8.7 per cent, deepening from a 6.7 per cent drop the previous month.
On a month-on-month basis, the CPI edged down by 0.2 per cent, worsening from a 0.1 per cent drop in May and exceeding the expected 0.1 per cent fall.
The producer price index (PPI), which measures the cost of goods at the factory gate, fell by 0.8 per cent in June from a year earlier. This decline was less severe than the 1.4 per cent drop in May and matched economists' forecasts. The reduction in the PPI was the smallest in 17 months, indicating a slight easing in deflationary pressures.
Beijing's efforts to revive consumption after a faltering post-COVID recovery have yet to fully address deeper structural problems, such as the ongoing housing market slump and employment uncertainties. These issues continue to dampen consumer and industrial activity, prompting calls for more effective and targeted economic policies.
As China navigates these economic challenges, the latest data underscores the complexity of achieving a stable and sustained recovery in the face of persistent domestic demand weakness and external economic pressures.
(with Reuters inputs)
Updated 08:06 IST, July 10th 2024