Data released by the National Bureau of Statistics on Sunday showed that China's June inflation figures remain soft in general. CPI inflation declined to 1.9 percent y/y in June, lower than 2.0 percent in the prior month. On a monthly basis, CPI dropped by 0.1 percent, illustrating a softening trend and in line with the weakening growth profile.
China's consumer inflation grew at its slowest pace since January. Consumer inflation in China decelerated in June as food prices increased at a slower pace. Data reinforced economists' views that more government stimulus steps will be needed to support the economy.
China’s Producer Price Index declined 2.6 percent year-over-year in June, which was a little weaker than expected, compared with a 2.8 percent drop in May. The index has lingered in deflationary territory for more than four years, although it has decelerated less rapidly in recent months.
"Further policy easing is still on the card, and we hold our view that the PBOC will cut both interest rates and reserve requirement ratio this month,” said Commerzbank in a report.
China on Friday will report second-quarter growth. Economists expect it will match or come in below the first quarter’s 6.7 percent rate, which was already the weakest pace since the global financial crisis.
