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China consumer prices rise slightly in June

BEIJING (AFP) – China consumer prices edged up in June, official data showed yesterday, but fell short of analyst expectations as the country’s economic recovery continues to falter.

The consumer price index rose 0.2 per cent on-year in June, down from May’s 0.3 per cent and the fifth straight month in positive territory, the National Bureau of Statistics (NSB) said.

While the country emerged from a period of deflation in February, prices have grown at a modest rate, in contrast to other major economies which have seen prices soar once again.

At the end of 2023, China plunged into deflation for four months, with the sharpest contraction in consumer prices in 14 years in January.

Bloomberg analysts had predicted a 0.4 per cent inflation rate for June.

An ongoing crisis in the real estate sector, which has long accounted for a quarter of the country’s gross domestic product, has dragged down growth.

High youth unemployment, which reached 14.2 per cent in May, is also dampening domestic demand.

The NBS said producer prices fell 0.8 per cent in June, slightly slower than May’s 1.4 per cent decline, continuing a now 20-month downward streak.

“The risk of deflation has not faded in China,” chief economist Zhiwei Zhang at Pinpoint Asset Management, said in a note sent to AFP.

“Domestic demand remains weak,” Zhang said, adding that “in the long term China will need a rebound of domestic demand to drive the economy.”

June’s data comes days before the start of a major Communist Party meeting that is expected to put economic recovery high on the agenda.

Policymakers have announced a series of targeted measures to boost infrastructure spending and spur consumption.

But analysts said much more needs to be done in the form of a major “bazooka” stimulus.

People shop for fruits and vegetables at a supermarket in Handan, in northern China’s Hebei province. PHOTO: AFP