Factory Gate Prices In China Experienced The Sharpest Decline In Seven Years

BEIJING says China’s factory gate prices caught their steepest fall in over seven and a half years in June, dropping short of expectations, while consumer prices remained unchanged. The sluggish post-COVID recovery exerted pressure on demand.

According to BEIJING, Producer Price Index continued its downward trend, declining for the ninth month. It recorded a significant drop of 5.4% compared to last year, marking the most significant decline since December 2015. This decline reached the 4.6% drop observed in the previous month and exceeded the predicted 5.0% fall.

National Bureau of Statistics reported that China’s consumer price index stayed flat yearly, different from the 0.2% increase recorded in May. This marks the slowest growth rate since February 2021, falling short of the anticipated 0.2% rise projected in a Reuters poll of analysts. The deceleration in China’s economic recovery is evident as manufacturing and consumer spending encounter obstacles.

China recently implemented a policy to reduce the interest rate to enhance liquidity and promote consumer spending. The Chinese government has expressed its dedication to managing measures that stimulate consumer consumption. 

As part of its goals, Beijing has set a target of achieving an average consumer inflation rate of 3% by 2023. It is projected that prices will rise by 2% yearly in 2022.

According to a report from Reuters, the core Consumer Price Index experienced a year-on-year increase of 0.4%. This indicates a decrease compared to the previous month’s explosive food and energy prices, which had noticed a growth of 0.6%.