BEIJING: China’s consumer price index rose less than expected in June while producer price inflation accelerated to its strongest pace in nearly three years, data showed Thursday, as elevated energy costs continued to weigh on household demand.
Consumer prices increased 1% in June from a year earlier, below the 1.1% median forecast in a Reuters poll and cooling from May’s 1.2% gain, the National Bureau of Statistics reported.
Core CPI, which strips out volatile food and energy prices, also rose 1% annually, edging down from a 1.1% increase in May. Food prices fell 1.6% year over year, easing slightly from a 1.7% decline the prior month.
The producer price index jumped 4.1% from a year earlier, matching economists’ expectations and accelerating from May’s 3.9% rise, according to NBS data. That marked the fastest annual growth since July 2022, based on LSEG figures. On a monthly basis, however, PPI declined 0.3%.
Producer prices recorded their steepest decline in nearly two years in June 2023, falling 3.6% from the prior year, as a deepening price war rippled through the economy.
They returned to growth in March as input costs rose amid the Middle East conflict, helping end one of China’s longest deflationary streaks in decades. Beyond war-linked supply disruptions lifting commodity costs, wholesale prices have also been buoyed by rising demand for artificial intelligence computing power, pushing up prices for tech equipment and semiconductors.
China’s manufacturing activity expanded faster than expected in June, with experts citing external demand, including for AI-related technology, as a key driver.
The resilience in exports and manufacturing is expected to reinforce Beijing’s reluctance to roll out stimulus to revive tepid consumer demand.
The International Monetary Fund on Wednesday forecast China’s economy to outperform global growth this year, raising its outlook for China to 4.6% from a previous 4.4% projection, while trimming global expansion to a sluggish 3%. China has set a modest annual growth target of 4.5% to 5%.
IMF officials attributed the optimistic revision to China’s strong high-tech manufacturing and export performance, as well as front-loaded public infrastructure investments.
