China Continues Stable Inflation, Deflation

August 9th, 2014
in econ_news, syndication

Econintersect: China's Consumer Price Index (CPI) meassure of inflation remained at 2.3% year-over-year in July, repeating the June number.  The month-breaking-news-130px7over-month number was up 0.1% from June but was the same as May which was also 0.1% higher than June.  July was the eighth month in a row with CPI at or below 2.5%.  The average for the last 12 months is 2.5% pushed up by three months (September-November) with reading 3% or higher. The Producer Price Index (PPI) fell for the 29th straight month, coming in at -0.9%, slightly stronger than -1.1% in June, both numbers reported for year-over-year change.

Follow up:

The following graphic from Trading Economics shows the CPI inflation rate for China over the last 12 months.


The PPI deflation was at its smallest level in almost two years for the second month in a row.  Note that the latest data point (-0.9%) has not yet been added to the Trading Economics graphic.


The latest inflation numbers, taken with the unexpectedly strong export numbers reported yesterday, might be considered encouraging for China to be stabilizing at the current growth level (in the low 7% range) for the time being.  But the imports total was also a surprise in June because it was very low.  And low levels of imports imply a weaker domestic market and could lead to lower CPI and deeper PPI deflation in coming months.  Of course, weaker domestic economy also impacts China's rebalancing objective of more domestic consumption.



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