China’s producer prices see worst drop in nearly two years

China’s producer prices Falling 3.6% in June A year ago, it points to its largest decline in about two years, because a deepening price war fluctuated with the already struggling economy with a warm consumer demand.

The consumer price index remained 0.1% higher in June compared to a year ago. Data from the National Statistics Office Wednesday returns to growth after a four -month decline.

According to the Reuters survey, economists envisaged a straight reading compared to the previous year.

According to NBS, the core CPI has peeling food and energy prices, increased by 0.7% compared to a year ago, the biggest increase in 14 months.

However, the decline in producer prices worsened in a Reuters survey further than 3.2%, and according to LSEG data, he pointed to his largest decline since July 2023. PPI has entered a multi -year deflationist line since September 2022.

The mainland increased by 0.19% after the release of China’s CSI 300 index.

“It is too early to call the end of the deflation at this stage. [as] The acceleration in the property sector is still weakening [and] The ‘Anti-In-Involution’ campaign is still in the early stage, Pat Patpoint said Zhiwei Zhang, President and Chief economist of Patpoint Asset Management.

Last week, at a high -level economic policy meeting, chaired by President Xi Jinping, Chinese policy makers, US tariffs on the world’s largest consumer market threatened the viability of sales to the world’s largest consumer market and clearly criticized consumers of Chinese companies clearly.

Beijing promised Tighten the regulations on such aggressive price cutting This did not affect consumer behavior while biting the profitability of the enterprises. The profits in industrial firms fell 9.1% in May compared to the previous year and took place in the most upright autumn since last year.

“Businesses should be directed to improve product quality and support the regular stage from the old production capacity” China said state -backed newspaperreferring to the meeting.

Capital Economics Chinese economist Zichun Huang said that last month was supported by a consumer goods exchange plan that offers subsidies for rebounds, households, electronic and electrical vehicles in consumer prices last month.

However, this increase will probably decrease in the second half of this year, and Huang said that if the excessive supply problem persists, it caused the underlying inflation.

Huang, “While the demand of the supply of goods continues to leave behind, permanent excessive capacity, the price battles between the producers will continue.”

Beijing can hold fresh stimuli

Larry Hu, the economist of China in Macquarie, has partially retroaches China’s acceleration in exports in recent months to encourage Beijing in a meaningful way to encourage the consumption of Beijing.

“Policy makers will continue to wait until the exports fall sharply.”

China’s export growth and irregular US tariff policies have shown some flexibility in recent months, even if they disrupted global trade. China’s general exports increased by 4.8% in May and 8.1% in April thanks to the increase sent to Southeast Asian countries, which greatly balance US goods.