China June inflation flat as economy struggles

People walk along Nanjing Pedestrian Road, a main shopping area, in Shanghai, China. REUTERS/Aly Song/File photo

BEIJING  -Chinese inflation was flat last month while producer prices sank more than expected, official data showed Monday, in the latest sign of weakness in the world’s second-largest economy.

The consumer price index for June was down from the 0.2 percent seen in May, according to the National Bureau of Statistics, and was worse than expected as domestic demand slowed.

A 7.2 percent annual drop in the cost of pork, the staple meat in China, as well as falling oil prices that made transportation cheap, dragged down the cost of the essential goods basket, the NBS said.

Producer prices — which measure the cost of goods at the factory gate — tumbled 5.4 percent on-year, following a 4.6 percent slide in May.

Economists polled by Bloomberg had expected prices to sink five percent.

Poor global demand and a steep drop in raw material costs have also put downward pressure on factory prices, the NBS said.

Economic growth has slowed sharply since April after Beijing lifted strict Covid rules at the end of last year, while the yuan sits at a seven-month low against the dollar as exports drop.

Authorities are coming under increasing pressure to step in with stimulus but other than a few small interest rate cuts and pledges of action there has been little of substance out of Beijing.

Ongoing trade tensions between the US and China have also dragged on the economy, with US Treasury Secretary Janet Yellen on Sunday wrapping up a visit to Beijing with no signs of a breakthrough.

Yellen said her talks with Chinese officials were “productive” but admitted there were “significant disagreements”.

China has set a growth target of “around 5 percent” this year, one of its lowest in decades.

Growth figures for the second quarter will be released on July 17.