China’s factory gate prices fall in June

China’s factory-gate prices fell less than expected in June, official data showed, as the country works towards recovering from the coronavirus while grappling with a heavy blow to global demand.

The producer price index (PPI) fell 3% from a year ago – improving from four-year lows the month before, according to National Bureau of Statistics data.

The pick-up comes as prices of international commodities saw some recovery in June, as the domestic manufacturing industry and market demand also improved, said NBS senior statistician Dong Lijuan in a statement.

Analysts polled by Bloomberg had expected PPI to fall 3.2%.

China’s consumer price index (CPI) came in at 2.5 %, a 0.1 point rise from May, on the back of a pick-up in food prices and in line with forecasts.

In particular, pork prices, a driving factor behind surging inflation last year, rose 81.6% onyear in June, a similar pace to the month before.

Dong noted that factors behind the rise included a slower rate of pig slaughtering, stricter requirements because of epidemic-prevention measures, and a drop in imports, all of which led to tighter supply of the staple meat.

China has been working to bounce back from a historic economic contraction in the first quarter caused by the coronavirus, which brought economic activity to a near-halt.

But the world’s second-largest economy now faces weakening global demand as the virus hammers key trading partners.

Moody’s Analytics said in a recent report that although production activity and exports continue to recover, domestic demand remained relatively soft until May.