Caixin Investigation | The year-on-year CPI growth rate in June may narrow slightly, and the year-on-year PPI growth rate is expected to accelerate

[Caixin.com] Overall food prices are moving downward, together with falling international oil prices, which may lead to a slight slowdown in the year-on-year growth rate of the June Residents’ Consumer Price Index (CPI), while core CPI year-on-year remains in a mild upward trend. For the Industrial Producers Price Index (PPI), although input-driven inflation from the earlier surge in international oil prices is easing, rising prices of non-ferrous metals and chips amid the artificial intelligence boom are still expected to support the year-on-year PPI growth rate to continue expanding. In terms of month-on-month changes, it may slow down or even turn negative.

Caixin’s recent survey of 12 domestic and international institutions shows that the average economists’ forecast for the June CPI year-on-year growth rate is 1.1%, which is 0.1 percentage points lower than May. The forecast range is 0.9% to 1.3%. Of these, seven institutions believe the June CPI year-on-year growth rate will slow, three expect it to remain unchanged, and the remaining two think it may rise.

CITIC Securities’ macro team expects that the June CPI year-on-year growth rate may fall slightly to around 1.1%. In the food category, pork has entered the traditional off-season period for consumption, and policies continue to promote de-capacity measures. In June, pork prices overall are expected to run stably, with only a limited decline. Open-air vegetables see concentrated market supply bringing additional supply, while in some southern producing areas, vegetable prices diverge due to heavy rain. Nationally, the average wholesale price of 28 types of vegetables rose 1.4% month-on-month, and the year-on-year decline narrowed at the margin to 2.3%. For non-food items, easing between Iran and the U.S. and Iran is driving international oil prices to keep falling. The year-on-year growth rate of the average price of refined oil products in June narrowed from 17.8% to 12.8%, which may pull down the fuel component in CPI for transportation tools year-on-year.