June CPI continues to rise moderately, and the overall price outlook for the second half of the year is expected to improve.

◎Reporter Chen Fang

The latest data released by the National Bureau of Statistics on July 9 shows: In June, the year-on-year change in the Consumer Price Index (CPI) decreased month-on-month by 0.3% and increased year-on-year by 1%. The year-on-year rise narrowed by 0.2 percentage points compared with May. The Producer Price Index (PPI) for industrial producers turned from rising to falling month-on-month, while the year-on-year increase widened. Experts interviewed analyzed that, affected by the fall in international gold and oil prices, the year-on-year CPI increase fell and the PPI turned down month-on-month. In the first half of the year, overall prices moved out of the bottom range, showing moderate inflation characteristics. In the second half, with the expansion of domestic demand policies expected to be intensified, the overall price trend is expected to improve.

Core CPI stays stable in the range above 1% year-on-year

In June, the year-on-year CPI increase declined. Among them, the year-on-year rise in prices of industrial consumer goods fell markedly, and the decline in food prices narrowed.

As the impact of international input-related factors weakened, it drove the year-on-year increase in domestic industrial consumer goods prices to fall. Data show that industrial consumer goods prices rose 2.9% year-on-year, with the increase falling by 1 percentage point from May. Within industrial consumer goods, the year-on-year price increases of gold jewelry and gasoline fell to 28.1% and 17%, respectively.

“Major commodity prices such as gasoline, non-ferrous metals, and gold—which had earlier contributed strongly to inflation—fell sharply in June, causing a larger drag on CPI.” Zhao Wei, Chief Economist at Shenwan Hongyuan Securities, said to a reporter from Shanghai Securities News.

For food prices, in June, food prices fell 1.6% year-on-year, with the decline narrowing by 0.1 percentage point from May. Pork prices fell 15.9% year-on-year, with the decline narrowing by 0.2 percentage point from May. Egg prices rose both month-on-month and year-on-year: in June, egg prices rose 20% year-on-year, with the increase widening by 11.6 percentage points from May; month-on-month, eggs rose 7%, impacting the month-on-month rise in CPI by about 0.03 percentage points.

In June, excluding food and energy prices, core CPI rose 1% year-on-year, continuing a moderate upward trend. Wen Bin, Chief Economist at Minsheng Bank, said that this year, core CPI has been stable in a range above 1% year-on-year. Service price increases have continued to be higher than those of goods, indicating that the price structure is being optimized.

PPI year-on-year increase slightly expands

Due to base effects, in June PPI rose 4.1% year-on-year, with the increase expanding by 0.2 percentage points from May.

Among industries with rising prices, the prices of coal mining and washing rose 20.6% year-on-year; the prices of electrical machinery and equipment manufacturing rose 5.1% year-on-year; the prices of computer, communications and other electronic equipment manufacturing rose 3.3% year-on-year; and the prices of ferrous metal smelting and rolling processing rose 3.1% year-on-year. The year-on-year increases in all four industries expanded compared with May.

Affected by seasonal factors and the decline in international crude oil prices, PPI fell 0.3% month-on-month in June.

In June, petroleum extraction prices fell 16% month-on-month, refined petroleum products manufacturing prices fell 3.1% month-on-month, with the declines expanding by 14.2 and 2.8 percentage points from May, respectively.

With sufficient summer rainfall, sunshine, and wind, the prices of hydropower generation, solar power generation, and wind power generation fell 9.1%, 2.5%, and 2.2% month-on-month, respectively.

Industrial upgrading is accelerating, boosting demand in some industries and pushing prices up. For example, as coverage of artificial intelligence scenarios keeps expanding, new raw materials and new materials are widely applied, and green transformation continues to advance. This led to virtual reality equipment manufacturing prices rising 8.4% month-on-month, and wearable smart device manufacturing prices rising 3.4% month-on-month.

Zhang Di, Chief Macro Analyst at China Galaxy Securities, said that the PPI peak within the year may be approaching. The “PPI-CPI scissors gap” is still widening, reflecting that upstream price hikes are not being transmitted to downstream terminal demand smoothly.

Looking ahead to the second half of the year, multiple experts said that the price trend is expected to improve overall. Wen Bin believes: In the second half of the year, policies to expand domestic demand are expected to be stepped up. Holidays such as summer and National Day will drive service consumption price rebounds, including tourism, accommodation, and catering. Although there is a time lag in the transmission from PPI recovery to CPI, the effects of equipment renewal and the “trade-in of old for new” policies for consumer goods on raising prices of durable consumer goods such as home appliances and automobiles are expected to gradually become apparent.

Previously, Wang Guanhuai, spokesperson of the National Bureau of Statistics and deputy director of the Comprehensive Statistics Department of the National Economy, said at a press conference of the State Council Information Office that the international environment remains complex and volatile, and there is uncertainty in the trend of international bulk commodity prices. However, in China, supply of major people’s livelihood goods is sufficient. Linkages across production, transportation, and sales are relatively smooth, and the policy system for ensuring supply and stabilizing prices keeps being improved. The capacity for price monitoring and early warning and emergency control has been enhanced. There are many favorable conditions to maintain stable price operations, and consumer prices are expected to maintain a moderate upward trend.

(Editor: Wen Jing)

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