China's July Inflation Rises 2.7 Percent

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　　Inflation in China has come in lower than market expectation, rising 2.7 percent in July on an annualized basis.

 

　　This is the same increase seen in June.

 

　　The inflation rate is well below the government's full-year target of 3.5-percent.

 

　　Despite food prices rising around 5-percent this past month, shoppers in Beijing don't appear to be noticing many changes.

 

　　"Changes on prices for common goods are not that obvious, just a bit of rise. But prices of cucumbers I think to some extent has had a more increase."

 

　　Meanwhile, the producer price index, the gauge¹ measuring inflation at the wholesale² level, fell 2.3 percent year on year.

 

　　This is down further from the 2.7 percent drop in the PPI in June.

 

　　Xu Gao is the chief economist³ with Everbright Securities.

 

　　"The prices of producing materials are rising nonetheless. It means the economy has shown some signs of heating up even though the overall demand is till weak."

 

　　The drop in the PPI marks the 17th straight month of decline in the Producer Price Index.

 

　　Wang Jun, researcher at the China International Economic and Exchange Center, is cautioning the new figures shouldn't be seen as an indicator⁴ of the broader recovery of the economy.

 

　　"PMI data released at the beginning of the month, the latest trade data as well as the fresh industrial output number all post to the direction that Chinese economy will stop declining in the third quarter of the year. But supportive policies from the government are still necessary to consolidate⁵ and stabilize⁶ the upward momentum⁷."

 

　　GDP growth has come in at 7.5 percent in the second quarter here in China, down from 7.7-percent in the first quarter.

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