While investors are trying to puzzle out whether China’s economy can handle accelerating inflation, experts give a positive answer. Indeed, the authorities’ efforts are bearing fruit. The Chinese National Bureau of Statistics reported that the domestic Consumer Price Index (CPI) inched up by 0.1% year-on-year in the first six months of 2024. Notably, the annual rate rose by 0.2% in June, with the CPI in urban areas growing by 0.2% and in rural areas by 0.4%. Food prices decreased by 2.1%, while non-food items logged a rise of 0.8%. Consumer goods prices dropped by 0.1%, whereas services prices appreciated by 0.7%.
In the first month of summer, prices of fresh fruits in China sank by 8.7% and vegetables - by 7.3% year-on-year. In contrast, meat prices climbed by 3.5% in June, in particular, pork prices jumped by 18.1%.
There was also an increase in medical service costs which grew by 1.5% in June from a year ago. Education services and cultural and entertainment activities logged a price growth of 1.7%. Transportation and communication services became 0.3% cheaper in June, while housing costs increased by 0.2%.
Besides, the National Bureau of Statistics reported the dynamic of factory inflation. The Producer Price Index (PPI) fell by 2.1% in the first half of 2024. In June, the PPI decreased by 0.8% year-on-year.
According to the official forecast, the country's inflation rate is expected to be 3% this year. Interestingly, by the end of 2023, inflation in China was 0.2%, although the authorities had projected a much stronger 3% rise in consumer prices.
Since February 2023, inflation in China has not surpassed 1%. Previously, in June and September 2023, analysts recorded zero inflation in the country, and deflation in July, October, November, and December of last year. Deflation also persisted in China in January 2024.
