China consumer prices rise slightly in June

Customers select vegetables at a market in Heze, in eastern China’s Shandong province on June 12, 2024. (Photo by AFP) / China OUT

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

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

READ: China consumer prices up in May, factory deflation persists

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 percent inflation rate for June.

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

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

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

READ: China consumer prices rose at slower rate in March

“The risk of deflation has not faded in China,” Zhiwei Zhang, chief economist 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 say much more needs to be done in the form of a major “bazooka” stimulus.