China food costs soar as PPI flatlines

Business | Reuters and Avery Chen 11 Jul 2019

China's consumer price index in June rose 2.7 percent year-on-year, the fastest in the past 12 months, with food prices rising 8.3 percent, the National Bureau of Statistics said yesterday. Fruit prices surged 42.7 percent from a year earlier while pork prices rose 21.1 percent.

Core inflation that strips out volatile food and energy prices was at 1.6 percent in June from a year earlier, the same annual pace as in May.

However, China Agri-Industries (0606) issued a profit warning yesterday. The subsidiary of top Chinese grains trader COFCO expects to record a 42.67 percent decline in net profit to HK$430 million in the first half, affected by African swine fever and narrowing average profit margin of the domestic oilseeds processing industry.

Meanwhile, China's producer prices flatlined in June on lower oil prices and weak global demand, fueling concerns that a slowdown in manufacturing from the trade war will further drag on growth.

The producer price index showed no growth in June from a year earlier, the lowest since August 2016. Factory gate prices slowed from May as well, falling 0.3 percent.

Also, China's interbank trading platform has introduced trading alerts to prevent money market rates from falling below specific levels, three sources with direct knowledge said yesterday, following a recent plunge in some short-term rates.

The move comes a day after the People's Bank of China said lending and borrowing rates in short-term markets should not fall below the rate it offers on excess cash that banks park with the central bank "under normal circumstances".

Elsewhere, automobile sales in China fell 9.6 percent in June from the same month a year earlier, the country's biggest auto industry association said yesterday, marking the 12th consecutive monthly decline in the world's largest vehicle market.

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