Chinese inflation data for July has just been released, with consumer prices remaining steady at a 2.7% annualised rate and the decline in producer prices moderating to -2.2% annualised from -2.6% in June:
The consumer inflation rate is well below the government’s official full-year target of 3.5%, raising the prospect that Chinese authorities could cut interest rates. The result also missed analysts’ expectations, who had tipped prices to to rise in July compared to a year ago due to rising pork and vegetable prices.
While producer prices fell for the 17th consecutive month – the longest stretch of wholesale price deflation in a decade – the result represented a significant improvement, suggesting that overcapacity might be easing.
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