China’s consumer price index (CPI), a main gauge of inflation, rose to 1.6 per cent in July, the highest level seen in 2015.
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The country’s foreign trade shrank by more than 7 per cent in the first seven months of the year, official figures showed Saturday.
The producer price index – a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI – declined 5.4 percent in July, the NBS said, compared with a 4.8 percent retreat in June, and marking the 41st consecutive monthly fall.
“China’s monetary and fiscal policies have to become more supportive over the rest of the year”, said Liu Li-Gang, an economist at ANZ.
HSBC said in a recent research note that it still expects another 25 basis point (bps) interest rate cut in the second-half of this year and a 200 bps cut in banks’ required reserve ratio (RRR). The People’s Bank of China has lowered interest rates four times since November to support an economy expected to grow this year at the slowest pace since 1990.
July’s shopper worth index was the very best to date in 2015.
Reflecting persistent sluggishness in the broader economy, annual consumer inflation stayed muted at 1.6 percent despite surging pork prices, slightly higher than a 1.5 percent estimate, and up from June’s 1.4 percent.
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Peking University economist Su Jian believes weak commodity prices drive down the prices of finished products, which delays investment and postpone consumption. The price of the meat – a major staple on Chinese dining tables and an important part of the CPI basket – leaped 16.7 percent in July from a year earlier, according to the statement. It said that monetary policy wouldn’t be determined by the price of a single commodity.
