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China’s producer price growth to slow down inflation pressure

Prices for the most-traded copper contract on the Shanghai Futures Exchange fell 7.7% in June.

Some analysts believe the moves will have only a limited impact due to an ongoing imbalance between tight supplies and rising demand by more countries recovering from the pandemic.

NBS data also showed China’s consumer price index rose 1.1% in June in annual terms, slower than a 1.3% gain tipped by the Reuters poll, pointing to limited pass-through to consumers from the high industrial prices.

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Pork prices, a key component of China’s CPI, have been on the decline in recent months, driving a drop of 1.7% in food prices. Concerned about tumbling pork prices, authorities late last month also announced plans to buy pork for state reserves.

China’s annual average consumer inflation is likely to be below 2% this year, the central bank governor Yi Gang said last month, well below the government target of around 3%.

Core inflation, which strips of volatile food and energy prices, stood at 0.9% in June, unchanged from May.

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