China’s factory deflation slows as recovery strengthens in July –

China’s factory deflation slows as recovery strengthens in July

BEIJING (Reuters) – China’s factory deflation eased in July, leading to a rise in global oil prices and industrial activity back to pre-coronavirus levels, indicating signs of recovery in the world’s second-largest economy.

FILE PHOTO: On August 6, 2018 in Chongqing, Chongqing, China, a worker was seen on a hot rolling production line at the Chongqing Iron and Steel Plant. REUTERS / Damir Sagolj

The National Bureau of Statistics (NBS) said in a statement on Monday, the Producer Price Index (PPI) fell 2.4%, compared with a 2.5% drop in analysts’ Reuters poll and 3.0% decline, in a statement on Monday. . In june.

Analysts say China’s industrial output is consistently returning to levels before the economy was massively crippled, as demand increases, government stimulus and surprisingly resilient exports drive a recovery.

Iron ore futures prices in Dalian have soared more than 50% so far this year, while steel bar prices used in construction have jumped by 12%.[IRONORE/]

According to Dong Lijuan, a senior statistician at NBS, petroleum and natural gas extraction prices rose 12% month-on-month, due to a steady decline in global crude oil prices. Coal mining and automobile manufacturing prices also turned positive in July.

Julian Evans-Pritchard, senior China economist at Capital Economics, said, “Another ramp-up in fiscal stimulus should continue to drive infrastructure spending over the coming months.

bad weather

However, PPI rose 0.4% on a monthly basis, unchanged from the increase in June, indicating pressure on construction and production work due to recent flooding in southern China. Some economists have warned that recovery may stall amid cautious consumer spending and a resurgence in the global transition.

In view of inclement weather, consumer inflation also increased in July.

The Consumer Price Index (CPI) rose 2.7% from a year earlier, its fastest pace in three months and 2.6% higher than expected and 2.5% in June.

This was mainly driven by an increase in pork prices, which rose 85.7% on an annual basis.

However, core inflation, excluding food and energy costs, rose only 0.5% in July from a year earlier.

Hu Yuixiao, chief macro analyst at Shanghai Securities, said, “More than expected price increases will bolster monetary authorities’ determination to normalize policies.”

Reporting by Yawen Chen and Se Young Lee; Editing by Sam Holmes

Our standard:Thomson Reuters Trust Theory.

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