Inflation in China

China Inflation (eop) | Economic News & Forecasts

China - Inflation (end of period)

Inflation stabilizes in June; PPI stalls

Consumer prices fell 0.1% from the previous month in June, following May’s flat reading. The print mostly reflected lower prices for transportation and communication as result of a large decline in fuel prices.

Inflation was steady at May’s 2.7% in June. The print was in line with the result that market analysts had expected. Annual average inflation stabilized at May’s 2.2% in June.

Producer price inflation (PPI), meanwhile, was flat in June, following May’s 0.6%. The reading was below market analysts’ expectations of 0.2%.

Analysts are warning that deflationary risks are slowly resurfacing. In this regard, Betty Rui, senior China economist at ANZ, remarks that:

“Deflationary risks have re-emerged in China, as seen in the plunge in June’s PPI and non-food CPI to a new low not seen since Q3 2016. […] Since PPI and non-food CPI have a strong correlation with profits in the manufacturing and services sectors, respectively, the undershooting of inflationary expectations will exert pressure on real economic activity. […] The slippage in inflation is likely to weigh on real activities, suggesting a rising need for more counter-cyclical measures.”

FocusEconomics Consensus Forecast participants expect that consumer inflation will average 2.2% in 2019, which is unchanged from last month’s estimate. In 2020, the panel also sees consumer inflation at 2.2%. Meanwhile, the panel expects producer inflation to be 1.7% in 2019, which is down 0.4 percentage points from last month’s projection. In 2020, panelists also see producer inflation at 1.7%.

China - Inflation (eop) Data

2013  2014  2015  2016  2017  
Inflation Rate (CPI, annual variation in %, eop)2.5  1.5  1.6  2.1  1.8  

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China Inflation (eop) Chart

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

China Facts

Bond Yield3.18-0.40 %Jul 11
Exchange Rate6.87-0.19 %Jul 11
Stock Market2,918-0.34 %Jul 11

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