China's inflation rises 0.2% in June, falling short of expectations
China's economic indicators for June presented a mixed picture, with consumer prices rising modestly for the fifth consecutive month while producer prices continued to show deflationary trends. According to the National Bureau of Statistics, the consumer price index (CPI) increased by 0.2% year-on-year, marking the slowest pace in three months and falling short of economists' forecasts of a 0.4% rise. This follows a 0.3% increase in May. Core CPI, which excludes volatile food and energy prices, saw a 0.6% year-on-year rise, slightly slower than the 0.7% increase observed over the first six months of the year.
On the producer side, the producer price index (PPI) contracted by 0.8% year-on-year in June, continuing a three-month deflationary trend but narrowing from a 1.4% decline in May. Food prices showed significant fluctuations, with pork prices rising by 18.1% year-on-year while beef prices fell by 13.4%. The ongoing crisis in the real estate sector, which constitutes a significant portion of China's GDP, along with high youth unemployment, has contributed to the slow growth in domestic demand.
In response to these economic challenges, the People's Bank of China has reduced banks' required reserve ratios in an effort to inject liquidity into the financial system and support lending. Despite these measures, economists remain cautious about China's growth prospects, noting that the country's economic recovery remains uneven. The data comes ahead of a significant Communist Party meeting that is expected to address economic recovery strategies.
