Producer Prices in China

China Producer Prices | Economic News & Forecasts

China - Producer Prices

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 - Producer Prices Data

2015   2016   2017   2018   2019  
Inflation (PPI, annual variation in %)-5.2  -1.3  6.3  3.5  -0.3  

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