China‘s factory-gate deflation worst in 2 years amid weak demand, trade risks
[BEIJING] China‘s producer deflation deepened to its worst level in almost two years in June as the economy grapples with uncertainty over a global trade war and subdued demand at home, piling pressure on policymakers to roll out more support measures.
While consumer prices rose for the first time in five months, the upturn was marginal as a prolonged housing market downturn in the world’s second-biggest economy added to headwinds from US President Donald Trump’s tariffs on trading partners.
The producer price index fell 3.6 per cent in June from a year earlier, worse than a 3.3 per cent decline in May and the largest fall since July 2023. That compared with forecast of a 3.2 per cent slide in a Reuters poll.
Some exports-oriented industries are under pressure in price terms, said Dong Lijuan, NBS statistician.
“The uncertainty of global trade environment has affected the export expectations of enterprises,” Dong said.
As subdued domestic demand remains a drag on China‘s economy, companies have resorted to price discounts to boost sales, prompting the authorities to urge an end to the auto industry’s bruising price wars.
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Highlighting the tepid consumer market, Chinese e-commerce giants Alibaba and JD.com have pledged heavy subsidies over recent months to expand aggressively into fast deliveries.
The consumer price index edged up 0.1 per cent last month from a year earlier, reversing a 0.1 per cent drop in May and above a Reuters poll prediction of an unchanged outcome.
The consumer price uptick was “mainly due to a rebound in industrial consumer goods prices,” Dong said.
On a monthly basis, the CPI was down 0.1 per cent versus a 0.2 per cent decline in May, and in line with economist forecasts of a 0.1 per cent drop.
Core inflation, excluding volatile food and fuel prices, spiked to 0.7 per cent in June from a year earlier, the highest in 14 months. REUTERS
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