Positive conditions help stabilise prices
BEIJING: China has the conditions to keep prices stable for the rest of the year despite elevated global inflation, with consumer inflation likely remaining below the nearly 3% target for 2022, officials and experts say.
Experts expect that China’s consumer inflation will rise modestly and factory-gate inflation should trend down for the rest of the year, leaving room for further monetary easing in the coming months.
Fu Linghui, a spokesman for the National Bureau of Statistics (NBS), said at a recent news conference in Beijing that despite facing rising inflationary pressure, China still enjoys many favourable conditions to keep overall prices stable for the rest of the year.
Fu said China has sufficient supply of agricultural and industrial products, and there is insufficient room for significant pork price gains considering factors such as China’s ample supply of hogs.
When it comes to imported inflationary pressure, Fu said the impact of import factors will likely ease, given monetary tightening among major economies and slower growth in international commodity prices.
China’s efforts to stabilise prices and supplies and the rapid growth in the production of major energy products will also help stabilise prices.
Looking ahead, Fu said while consumer inflation may rise notably in some months in the second half, China has conditions in place to keep consumer prices stable for the full year.
Fu’s remarks came as China’s consumer inflation accelerated to the highest level in two years, largely driven by surging pork prices, but it still managed to come in weaker than expected in July.
China’s consumer price index (CPI), a main gauge of inflation, rose 2.7% y-o-y in July, following a 2.5% rise in the previous month, said the NBS. China’s producer price index, which gauges factory-gate prices, increased 4.2% y-o-y in July after a 6.1% rise in June, cooling to the lowest level since February 2021.
Feng Mohan, a macroeconomics researcher at Beijing FOST Economic Consulting Co Ltd, said the rise in July CPI was mainly driven by food price gains, which was largely due to rising pork prices.
Despite facing structural inflationary pressure amid elevated global inflation, Feng said the CPI will likely rise mildly in the following month as there is limited room for further food price gains, and growth in industrial products prices may slow amid fears over a gloomy global economic outlook.
The People’s Bank of China (PBOC), the nation’s central bank, said in a new report that it will strike a balance between economic growth and price stability.
The PBOC said China may face mounting inflationary pressure at home due to factors including a recovery in consumer demand, rising pork prices and high energy and raw material costs, and imported inflationary pressure will continue to exist. — China Daily/ann