Driven by higher food prices, especially pork prices, China's CPI continued to grow at a 17-month high in July, while PPI fell to its lowest level in nearly three years, formally entering the deflationary zone. Analysts believe that because the tight pork supply pattern has not changed and Sino-US trade frictions have increased the supply cost of agricultural products to a certain extent, CPI may still have some room to rise, but overall moderate and controllable, monetary policy should not be too subject to inflationary pressures.
They believe that under the current situation of both domestic and foreign demand downturn, inflation risk can be controlled as a whole, and the central bank has clearly stated that the second half of the monetary policy will continue to be tight and moderate, so the current inflation situation will not hinder the flexible adjustment of domestic monetary policy.
China's National Bureau of Statistics announced on Friday that the consumer price index (CPI) rose 2.8% in July from a year earlier, slightly higher than the 2.7% median estimated by Reuters, the biggest increase since February 2018. The industrial producer factory price index (PPI) fell 0.3% in July from a year earlier, below the median Reuters survey estimate of - 0.1%, the lowest since August 2016, when it was - 0.8%.
CPI rose 0.4% in July, the median value of the Reuters survey forecast rose 0.2%; PPI fell 0.2%; food prices in CPI rose 9.1% in July, up from 8.3% last month, to a new high since January 2012; non-food prices rose 1.3% year-on-year.
In terms of ring ratio, the hot weather and excessive precipitation in some areas are not conducive to the production, storage and transportation of fresh vegetables. Prices have risen by 2.6%, affecting CPI by about 0.06 percentage points. Affected by the African swine plague, the supply of pork was tight and the price rose by 7.8%, which affected CPI's rise by about 0.20 percentage points.
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