China's CPI continues expansion, PPI registers slower growth

China's consumer inflation continued its modest growth in June, and producer prices registered slower growth following efforts to stabilize the prices of raw materials.

China's consumer price index (CPI), one of the main gauges of inflation, rose 1.1 percent year-on-year in June, lower than the 1.3 percent year-on-year growth recorded in May, data from the National Bureau of Statistics (NBS) showed on July 9.

The average CPI in the first half of the year increased 0.5 percent from the same period last year, according to the NBS.

China's economy recovered steadily in June, with ample supply in the consumer market and the stable performance of consumer prices, said senior NBS statistician Dong Lijuan.

The CPI growth in June was mainly due to the strong carryover effect of last year's price changes, said Dong.

The carryover effect contributed 0.8 percentage points to the CPI growth, while new price increases contributed 0.3 percentage points, the NBS data shows.

Food prices shrank 1.7 percent year-on-year in June due to slumping pork prices, reversing the 0.3 percent growth seen in May and pushing down consumer inflation by 0.31 percentage points, according to the data.

As hog production continued to recover and the pork supply continued to increase, pork prices dropped 36.5 percent year-on-year in June, a pace 12.7 percentage points faster than in May. On a monthly basis, the prices declined 13.6 percent, the NBS data shows.

Non-food prices went up 1.7 percent year-on-year in June, compared with a 1.6 percent increase seen in May, with the prices of air tickets surging 27 percent, down from 32.3 percent in May. Gasoline prices increased 24.3 percent year-on-year, higher than the 22 percent recorded in May.

China has set its consumer inflation target at approximately 3 percent for the year 2021, according to this year's government work report.

The data also shows that China's producer price index (PPI), which measures costs for goods at the factory gate, rose 8.8 percent year-on-year in June, falling from its 9 percent growth in May.

The PPI increased 0.3 percent on a monthly basis, dropping by 1.3 percentage points from May, according to the data.

The price hikes in certain industries including steel and non-ferrous metals were subdued, as their prices moved from rising to falling in June.

China will increase financial support for the real economy, particularly for micro, small and medium-sized enterprises, according to a State Council executive meeting held on July 7.

The measures are expected to mitigate the impact of commodity price hikes on the operations of companies, according to the meeting. It noted that the country will refrain from applying mass stimuli, and will maintain the stability of monetary policy and enhance its effectiveness.