China’s producer price inflation was unchanged last month and remained well off highs seen earlier this year, amid lingering oversupply issues in the steel sector and as signs of economic weakness weighed on the outlook for prices.
The producer price index rose 5.5 percent last month from a year earlier, the Chinese National Bureau of Statistics said yesterday.
This was in line with analyst forecasts and unchanged from the previous month. Prices of raw materials are making a modest recovery, helped by stronger futures prices in China in the past few weeks, after an earlier hit taken from a broader cooling in economic activity since March.
China’s consumer prices rose 1.5 percent last month from a year earlier, in line with market expectations and May’s reading, the bureau said, with food prices continuing their declines albeit at a slower pace.
There are some concerns among analysts that price pressures could weaken throughout the rest of the year as economic fundamentals soften.
“The upshot is that, having eased in previous months, price pressures appear to have stabilized in June,” Julian Evans-Pritchard from Capital Economics in Singapore wrote in a note. “Nonetheless, with slowing credit growth likely to weigh on economic activity in coming quarters we think that, volatility in food prices aside, inflation still has further to fall. This will disappoint those hoping for a sustained period of reflation that could help to erode corporate debt burdens.”
Food prices, the biggest component of the consumer price index, fell at a slower 1.2 percent from the previous year, after sliding 1.6 percent in May and 3.5 percent in April.
“Falling food prices can be attributed to a high build-up of food reserves and seasonal factors,” State Information Center chief economist Zhu Baoliang (祝寶良) said, according to a story published yesterday in China’s Financial News, affiliated with the People’s Bank of China.
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