China June CPI stabilises, offset by falling PPI; more easing expected

Beijing

INFLATION stabilised in June in China but the producer price index (PPI) continued to contract, suggesting deflationary pressures are still undermining the softening economy. Analysts expect further easing measures through the end of the year.

The consumer price index (CPI) rose 1.4 per cent in June, slightly above economists' expectations - a first sign that faltering demand could be stabilising. In May, prices rose 1.2 per cent, when economists had expected a rise of 1.3 per cent.

However the rise could be short- lived, analysts say, as consumer confidence could be damaged by the government's inability to stabilise the volatile stock markets, which have fallen by more than one-third in the past…