BEIJING – China's factory-gate inflation fell to its lowest level in 15 months in June, bucking the global trend of rising prices. The producer price index (PPI) increased 6.1 percent year on year in June, according to the National Bureau of Statistics (NBS), following a 6.4 percent increase in May. In a Reuters poll, analysts predicted a 6.0 percent increase in the PPI rate.
According to NBS official Dong Lijuan, the slower rise in the PPI was driven by the resumption of additional industrial production, stable supply chains in key sectors, and government policies to stabilise commodity prices. According to the NBS, inflation in the ferrous metal mining and processing industry was the lowest, while producer prices in the oil and gas extraction industry were the highest.
China's producer inflation has slowed for six months in a row. This stands in stark contrast to soaring global inflation, which has prompted major central banks around the world to raise interest rates.The consumer inflation rate in the world's second-largest economy rose by the most in nearly two years, but remained within the country's target range of around 3%.
The rise in consumer inflation follows a rise in fuel prices, implying that policymakers will need to keep a close eye on any persistent cost pressures amid the global price surge. China will continue to face structural and imported inflationary pressures.
According to Ying Xiwen, a senior analyst at Minsheng Bank, "the slow recovery of domestic demand will also raise headline consumer inflation." However, growth challenges remain, including concerns about recurring COVID outbreaks.
Some areas have recently reported cases of flare-ups, which could slow or even halt recovery. China will issue 2023 advance quota for local government special bonds in the fourth quarter in order to boost the flagging economy, with the new quota likely to be greater than 1.46 trillion yuan ($218.09 billion) for 2022.