The main drivers of consumer prices are rising food prices.
(Photo: dpa)
Beijing Chinese producers defied global cost pressures in July. Producer prices rose by 4.2 percent compared to the same month last year, more slowly than in almost a year and a half, as the statistics office announced in Beijing on Wednesday.
In June, the increase was still 6.1 percent. This is good news for the economy and consumers in Germany: from no other country in the world are so many goods imported as from the People’s Republic – they totaled more than 142 billion euros in 2021. The easing of price pressure on Chinese manufacturers could take out a lot of inflationary pressure on goods in time for the Christmas business.
“Ex-factory inflation will remain on a downward path for the rest of the year,” said Capital Economics China economist Zichun Huang. “Because raw material prices continue to fall and the supply bottlenecks are easing.” Less construction is taking place in China due to the real estate crisis, which is reducing demand for a number of raw materials. This in turn dampens the inflationary pressure.
Chinese consumer prices rose 2.7 percent in July compared to the same month last year. This is the highest inflation rate in two years. Economists polled by Reuters had even expected an increase to 2.9 percent.
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The main drivers are rising food prices: these cost an average of 6.3 percent more than in July 2021. The decisive factor here is the sharp increase in the price of pork, which cost a good fifth more.
Since the inflation rate remains below the tolerance threshold of three percent issued by the central bank despite the increase, it can continue to boost the ailing economy with an easy monetary policy. This is burdened by corona lockdowns.
The once extremely strong real estate market is also reeling from one crisis to the next. Leading Chinese politicians have therefore recently signaled that the government’s official growth target of around 5.5 percent for 2022 is likely to be missed. Economists polled by Reuters only expect gross domestic product to increase by 4.0 percent this year.
More: Has inflation peaked? How experts assess the situation in the USA and Europe