By Qiaoyi Li and Ryan Woo
BEIJING- China’s consumer prices grew for a fifth month in June but missed expectations, while producer price deflation persisted, with domestic demand mired on a slow recovery track despite support measures for the world’s second-largest economy.
Beijing has sought to revive consumption after a stuttering post-COVID recovery, but concerns are lingering over more fundamental issues including a protracted housing downturn and job insecurity. That has dented consumer and industrial activity and reinforced calls for more effective policies.
The consumer price index (CPI) in June rose 0.2 percent from a year earlier, against a 0.3 percent uptick in May, the slowest in three months, data from the National Bureau of Statistics showed on Wednesday, below a 0.4 percent increase forecast in a Reuters poll.
“The risk of deflation has not faded in China. Domestic demand remains weak,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
Food prices fell even more, despite supply disruptions caused by bad summer weather, underlining the soft demand.
Food prices slipped 2.1 percent year-on-year, compared with a 2 percent decline in May.
Notably, fresh vegetable prices tumbled 7.3 percent versus a rise of 2.3 percent in May. A decline in fresh fruit prices deepened to 8.7 percent from 6.7 percent in May.
CPI edged down 0.2 percent month-on-month, versus a 0.1 percent drop in May and worsening from an expected 0.1 percent fall.
The producer price index (PPI) fell 0.8 percent in June from a year earlier, less than a 1.4 percent decline the previous month, and matched a forecast 0.8 percent fall.
The fall in the PPI was the smallest in 17 months, mostly attributable to a lower base last year.
“The deepening declines in factory-gate prices of consumer durables underscores that excess manufacturing capacity remains a worsening issue,” said Gabriel Ng, assistant economist at Capital Economics.