China’s factory-gate inflation, as measured by PPI, marked its ninth consecutive decline in June, slumping by -5.4% yoy. This drop is the steepest since December 2015 and outstripped -4.6% yoy in May, a well as expectation of -5.0 yoy. PPI fell -0.8% on a month-on-month basis in June, slightly less than the -0.9% mom fall registered in May.
National Bureau of Statistics statistician Dong Lijuan pointed to tumbling commodity prices, particularly oil and coal, as the driving force behind the slump in factory-gate prices. The comparison to high base figures from the previous year also played a role in the significant drop.
Additionally, China’s CPI continued to lose momentum, sliding from 0.2% yoy in May to 0.0% yoy in June, its lowest reading since February 2021. This downturn defied expectations of a 0.2% yoy. On a month-on-month basis, June’s CPI mirrored the previous month, dipping by -0.2%.
Analyzing the CPI’s components, core CPI, which excludes volatile food and energy prices, showed a tempered 0.4% yoy rise, compared to 0.6% yoy in May. Food prices accelerated by 2.3% yoya leap from May’s 1.0% yoy increase, while non-food prices moved in the opposite direction, falling by -0.6% yoy in contrast to a flat performance in May.
The sustained descent in PPI, coupled with lackluster CPI, underlines the ongoing deflationary pressures in China’s economy.
