Kuwait Times

China inflation edges up on food prices

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BEIJING: China’s consumer inflation edged up in July, official data showed yesterday, partly because of rising food prices from flood-related disruption­s and as the country recovers from the coronaviru­s outbreak. The consumer price index (CPI), a key gauge of retail inflation, had been pushed up over the past year by livestock prices after China’s pig herds were ravaged by African swine fever, with the COVID-19 outbreak later hitting supply chains.

Consumer inflation has been easing since January but ticked up again in recent months, with the CPI hitting 2.7 percent last month, according to the National Bureau of Statistics (NBS), slightly better than forecasts in a Bloomberg News poll of analysts.

NBS senior statistici­an Dong Lijuan said yesterday that food prices rose 13.2 percent from a year ago, nudging the CPI up-with pork prices climbing 85.7 percent. “With the gradual recovery of catering services, demand for pork continued to increase,” said Dong, adding that this was accompanie­d by floods in many areas across the country, which hit the transporta­tion of live pigs.

Prices of vegetables rose also, affected by “unfavorabl­e weather”, according to Dong. Julian EvansPritc­hard of Capital Economics said

“floods that have swept across China since late June appear to have disrupted supply chains and production in the Yangtze River Delta, where around half of China’s agricultur­al production takes place”. But Nomura chief China economist Lu Ting told AFP he expects the CPI “to resume its downtrend soon in coming months”, with the temporary disruption­s fading.

In a sign of the weakness outside the food sector, core inflation, which strips out food and energy costs, came in at a ten-year low of 0.5 percent. Meanwhile, the producer price index (PPI) fell 2.4 percent from a year ago in July, better than the three percent drop the month before. The reading-which measures the cost of goods at the factory gate-was also better than the 2.5 percent drop forecast by analysts.

Factory gate prices had been dragged by the pandemic fallout but started rising again in June, with analysts noting a recovery in industrial demand. China is working to bounce back from a historic economic contractio­n in the first quarter caused by the virus, which had shut down most activity in the country. Evans-Pritchard said: “The key driver continues to be the rebound in commodity prices, with the oil and metal processing sectors seeing the fastest rises in output price.”

“This is consistent with broader evidence of a stimulus-led recovery in constructi­on and industrial activity,” he added. He noted a further ramp-up in fiscal stimulus should continue to shore up infrastruc­ture spending in the coming months, and support further recovery in economic activity and producer prices. — AFP

 ??  ?? SHENYANG, China: Customers buy vegetables at a market in Shenyang, in China’s northeaste­rn Liaoning province yesterday. — AFP
SHENYANG, China: Customers buy vegetables at a market in Shenyang, in China’s northeaste­rn Liaoning province yesterday. — AFP

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