Inflation in China

China Inflation | Economic News & Forecasts

China - Inflation

Inflation recedes in June

Consumer prices dropped 0.40% in June over the previous month, a sharper drop than the 0.20% drop recorded in May and driven by lower food prices. June's result marked the sharpest fall in prices since March.

Inflation edged down to 1.1% in June, from May’s 1.3%. Accordingly, the trend pointed down mildly, with annual average inflation coming in at 0.9% in June (May: 1.0%). Meanwhile, producer price inflation edged down to 8.8% in June, from May’s 9.0%, likely supported by a more favorable base effect and recent steps taken by the government to tame price pressures, including a crackdown on speculation and a release of state stockpiles.

Looking ahead, producer price inflation should stay elevated in H2 notwithstanding government measures, amid resurgent global demand and supply constraints. Regarding consumer prices, panelists see a pickup later this year, although improved pork supply due to farmers rebuilding their hog herds in the wake of African swine fever will keep a lid on the increase.

On producer prices, Ho Woei Chen, economist at United Overseas Bank, commented:

“Domestic measures to contain commodity price gains may have helped to stabilize the PPI but elevated global crude prices and higher freight costs as a pickup in seasonal demand towards year-end exacerbates the tight supply chain […] may further contribute to the price pressure. The PPI inflation is likely to stay elevated in H2 21 and we maintain our full-year forecast of 7.5%.”

FocusEconomics panelists forecast that consumer price inflation will average 1.6% in 2021, which is unchanged from last month’s estimate, and 2.3% in 2022. Producer price inflation is forecast to average 5.7% in 2021, which is up 1.0 percentage point from last month’s forecast, and 2.3% in 2022.

China - Inflation Data

2015   2016   2017   2018   2019  
Inflation Rate (CPI, annual variation in %)1.4  2.0  1.6  2.1  2.9  

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China Inflation Chart

China Inflation
Note: Annual variation of consumer price index (CPI) in %.
Source: National Bureau of Statistics of China and FocusEconomics calculations.

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Value Change Date
Bond Yield3.17-0.40 %Dec 31
Exchange Rate6.96-0.19 %Jan 01

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