China Inflation Rate Rises to 4-Month High in July



China's consumer price inflation rose to a four-month high of 2.1 percent year-on-year in July of 2018 from 1.9 percent in the previous month and above market consensus of 1.9 percent. Still, inflation remained well below the Chinese government’s target of around 3 percent for 2018.

The politically sensitive food inflation picked up to a three-month high of 0.5 percent in July from 0.3 percent in the prior month, mainly boosted by a rebound in fresh fruit prices (0.4 percent vs -5.3 percent in June). Additional upward pressure came from: eggs (11.7 percent vs 15.1 percent); poultry (6.6 percent vs 6.7 percent); and fresh vegetables (3.8 percent vs 9.3 percent). Pork prices, however, continued to fall sharply (-9.6 percent vs -12.8 percent), as well as edible oil costs (-0.7 percent vs -0.8 percent).

In addition, prices rose for: transport and communication (3 percent vs 2.4 percent), with vehicle fuel prices jumping 22.2 percent (vs 17.8 percent); rent, fuel & utilities (2.4 percent vs 2.3 percent); education, culture and recreation (2.3 percent vs 1.8 percent); household goods and services (1.6 percent vs 1.5 percent); clothing (1.2 percent vs 1.1 percent); other goods and services (1.2 percent vs 0.9 percent); and healthcare (4.6 percent vs 5 percent).

Annual core inflation, which excludes volatile items such as food and energy, stood at 1.9 percent in July, the same as in the previous two months.

On a monthly basis, consumer prices went up 0.3 percent in July, following a 0.1 percent drop in June and beating market expectations of a 0.2 percent rise. It was the first monthly increase in consumer prices for five months, driven by higher prices of pork (2.9 percent vs 1.1 percent) and fresh vegetables (1.7 percent vs -1.8 percent).

Meanwhile, the producer price index increased by 4.6 percent from a year earlier in July, after a 4.7 percent rise in the previous month and beating market expectations of 4.4 percent. Prices of means of production went up 6 percent (vs 6.1 percent in June), buoyed by extraction (13.4 percent vs 11.5 percent), raw materials (9 percent vs 8.8 percent) and processing (4.1 percent vs 4.6 percent). Also, consumer goods inflation rose to 0.6 percent in July from 0.4 percent in June, led by clothing prices (0.7 percent vs 0.3 percent) while inflation was unchanged for both food production (at 0.7 percent) and daily use goods (at 1.1 percent). By contrast, prices of consumer durable goods continued to decline (-0.2 percent vs -0.5 percent). On a monthly basis, producer prices edged up 0.1 percent.

China Inflation Rate Rises to 4-Month High in July


National Bureau of Statistics of China | Rida | rida@tradingeconomics.com
8/9/2018 10:00:18 AM