China’s consumer inflation remained below the government’s goal in July, suggesting monetary easing has yet to filter through to prices in the broader economy.
The consumer price index rose 2.3 percent from a year earlier, the National Bureau of Statistics said today in Beijing, the same pace as in June and also the medianestimate in a Bloomberg News survey of economists. Factory-gate prices fell 0.9 percent, matching projections and extending the longest stretch of declines since 1999.
Subdued inflation gives Communist Party leaders room to roll out more measures to support the economy after authorities expedited railway spending and freed up money for loans to counter a slowdown earlier in the year. A report yesterday showed imports unexpectedly fell in July, reflecting weak corporate investment, Royal Bank of Scotland Group Plc said.
“The weak CPI data today suggests that there is room for policy to stay accommodative,” said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “People are worried that because the economy has stabilized, policy will start to tighten, but in the near term that’s not very likely because inflation pressure is still muted.”
Analysts’ estimates for consumer inflation ranged from 2 percent to 2.6 percent. Projections for the decline in producer prices ranged from 0.6 percent to 1.4 percent, with a median of 0.9 percent, following June’s 1.1 percent drop. Improving Trend
Producer prices fell for the 29th straight month, the longest run of declines since 31 months from 1997 to 1999. At the same time, the July drop was the smallest since April 2012, a trend that the statistics bureau said today shows an
improving supply-demand situation in industrial markets.
The Shanghai Composite Index rose 0.4 percent in the week ended yesterday, the fourth straight gain, after export growth unexpectedly accelerated in July. The yuan strengthened 0.38 percent against the dollar during the week, the biggest advance in almost two months, as China reported a record monthly trade surplus.
Downward pressure on some prices will continue amid antitrust investigations by the nation’s top economic-planning agency. Toyota Motor Corp. and Honda Motor Co.’s Chinese ventures yesterday joined Bayerische Motoren Werke AG, Daimler AG’s Mercedes-Benz, and Volkswagen AG’s Audi brand in announcing a cut in prices of spare parts after the National Development and Reform Commission said it was probing whether automakers manipulated prices. Government Goal
The government’s goal is to keep consumer-price increases within about 3.5 percent this year while achieving economic growth of about 7.5 percent, Premier Li Keqiang announced in March.
The housing component of the CPI, which includes rental costs, utilities and building materials, rose 2 percent from a year earlier, the smallest increase in two years.
“Domestic demand is still fairly weak, especially with property in a down cycle, so for the rest of this year I’m not really worrying about inflation pressure,” Macquarie’s Hu said.
Trade data released by the General Administration of Customs yesterday showed overseas shipments rose 14.5 percent in July from a year earlier and imports fell 1.6 percent. Surges in sales to the U.S. and European Union, China’s biggest markets, indicate demand from abroad will help sustain expansion.
