China Inflation Edges Higher in June

China’s consumer inflation edged up slightly in June while stubbornly weak producer prices fell again, data that could increase worries about a sluggish Chinese economy which is also smarting from a stock market rout.  China’s consumer inflation quickened to 1.4 percent year-on-year in June, beating market expectations.

Analysts polled by Reuters predicted the index would come in at 1.3 percent, compared with 1.2 percent posted for May.  The producer price index cooled to -4.8 percent in June, the National Bureau of Statistics said on Thursday. This marks its 39th straight month of declines.

The market had expected producer prices to fall 4.5 percent on an annual basis after a decline of 4.6 percent the prior month.  Kevin Lai of Daiwa Capital Markets in Hong Kong said that given what’s going on in the markets, “there must be pressure on the central bank to ease to counter deflation pressure. There must be a lot of negative wealth effect from the stock market, which is deflationary. That means in the next few months we may see further downward pressure on CPI.”


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