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China's June CPI Growth to Remain Flat

03 July 2014

CHINA - An upcoming release of official economic data for June will show that China's inflation eased again last month, analysts have forecast.

With food prices remaining stable due to abundant supply, there is also consensus among experts that the trend will continue in the second half of the year.

June's Consumer Price Index (CPI), a main gauge of inflation, will probably show a year-on-year increase of 2.4 per cent, slightly down from 2.5 per cent in May, said a report from the Bank of Communications (BoCom).

The estimate was echoed by other financial institutions ahead of the official release of the June CPI figure on 9 July.

Huang Jun, an analyst with China Merchants Securities, attributed the falling CPI growth to the summer harvest, which laid a foundation for the stable price. Food prices account for a weighting of around one third in the calculation of CPI in China.

Food prices stayed flat last month. Prices of vegetable, meat and aquatic products dropped slightly at the end of June, according to data from the Ministry of Commerce and the National Bureau of Statistics.

Other prices included in the CPI's calculation are also unlikely to have pressed on inflation. Prices of gasoline and diesel increased mildly after 23 June, while growth in house rent was sluggish amid China's cooling property market.

Lian Ping, chief economist of the BoCom, predicted China's CPI growth will retreat in the second half, citing stable pork prices, shrinking home transactions and limited influence from loosening liquidity.

Dr Ping expects a CPI growth of 2.2 per cent year on year in the second half, bringing the full-year rate to 2.2 per cent, which will be down from 2.6 per cent in 2013.

TheCattleSite News Desk



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