China’s consumer inflation rose to a two-year high in July, official data showed on Wednesday, with a rise in pork prices pushing up food costs.
Compared to other countries, consumer costs have not skyrocketed in the world’s second largest economy and have largely been spared the impact of a global spike in food prices following the Russian invasion of Ukraine.
China’s consumer price index (CPI), a key indicator of retail inflation, rose a less-than-expected 2.7 percent year on year in July, data from the National Bureau of Statistics (NBS) showed.
The CPI rose slightly year-on-year “due to increased prices of pork, fresh vegetables and other foods, as well as seasonal factors,” Dong Lijuan, senior statistician at the NBS, said in a statement.
Food prices are up 6.3 percent year-on-year, with pork up 20.2 percent in July, she added.
Prices for the main meat rose in part due to some farmers’ reluctance to sell — ostensibly to maximize profits — and a pick-up in consumer demand, the NBS said.
While fuel prices were also higher than the same period last year, their growth rates have slowed, Dong said.
“The headline rate has been lifted by fuel inflation and, more recently, a rebound in food inflation,” said Julian Evans-Pritchard, chief China economist at Capital Economics, in a recent report.
He added that a weak labor market “could ease further price pressures” and he expects inflation to ease later this year.
The producer price index (PPI) – which measures the cost of goods at the factory gate – rose 4.2 percent in July, up from 6.1 percent in June, official data showed on Wednesday.
That was lower than the expectation in a Bloomberg poll of analysts.
The NBS said this was influenced by a fall in international commodity prices such as crude oil and non-ferrous metals.
“The priority of keeping factories open while restricting much consumer activity has meant domestic lockdowns have been disinflationary,” Evans-Pritchard added in his earlier report.
“Unlike elsewhere, the stimulus was aimed at investment rather than household spending.”
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