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Inflation 'mild', seen as easing in Q3
Last Updated: 2019-07-11 02:58 | China Daily
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China's consumer price index, a main gauge of inflation, rose 2.7 percent year-on-year in June, the National Bureau of Statistics said Wednesday.

The CPI reading, in line with market expectations, was unchanged from the figure in May. On a monthly basis, it edged down 0.1 percent last month.

Analysts said inflation may stabilize and ease in the third quarter and will not have a major bearing on the country's monetary policy.

For the first half of this year, the CPI rose 2.2 percent year-on-year.

Food prices rose 8.3 percent year-on-year in June, up from 7.7 percent in May, but on a month-on-month basis, they fell by 0.3 percent. Fruit prices hit a record high by climbing 42.7 percent from a lower base a year ago.

"Overall, inflation in the first half, which was 2.2 percent, is mild and within the inflation control target (of 3 percent) for this year," said Niu Li, deputy head of the Department of Economic Forecasting at the State Information Center.

The whole-year inflation rate may stand at 2.2 percent or 2.3 percent, Niu told China Daily.

CPI growth momentum is weakening and prices may start to decline in the third quarter, according to a China International Capital Corp report. The rising CPI in recent months is mainly driven by a low comparison basis last year, and the low basis effect will fade in August, it said.

The report added that the stable CPI growth trend may not have much bearing on monetary policymaking.

"Inflation is not the top concern," said Liu Chunsheng, an associate professor at the Central University of Finance and Economics in Beijing. "Growth stabilization is what we should care about the most."

The producer price index, which measures factory-gate prices, came in at zero year-on-year in June, down from a 0.6 percent rise in May, the National Bureau of Statistics said.

The fall may continue and become sharper in the third quarter, indicating tepid demand that may lead to weakening of growth, analysts said.

If demand remains fragile, it cannot be discounted that China may roll out more stimulus policies on both monetary and fiscal fronts, such as lowering interest rates or reserve requirement ratios for banks, increasing fiscal inputs in infrastructure investment or further tax cuts, Liu said.

"But in the longer term, China needs to further reform and open up its economy to unleash its intrinsic growth potential," he told China Daily.

China's GDP growth will be stable despite easing indicators in the second quarter, said Niu of the State Information Center, adding that GDP growth may be about 6.3 percent year-on-year in the first half, compared with 6.4 percent in the first quarter.

"The economy is quite resilient against external shocks," Liu said, "and Chinese enterprises have become used to the uncertainties posed by Sino-US trade disputes."

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Inflation 'mild', seen as easing in Q3
Source:China Daily | 2019-07-11 02:58
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