NBS: China's July CPI stays flat, PPI falls 3.6% YoY

Last month, China's CPI failed to extend the on-year rise registered in June, dragged down by weaker prices for food, explained Dong Lijuan, a senior statistician with NBS. China's food prices in July fell by 1.6% on year and slipped 0.2% on month in July, the data showed.

However, the CPI increased on month driven mainly by the strengthening prices in the tertiary sector and industrial consumables, Dong noted. For example, in July domestic prices for air tickets, tourism, and hotel accommodation increased significantly by 17.9%, 9.1% and 6.9% respectively from the previous month, as the travel activity improved during the country's summer vacation for students, according to NBS data.

Excluding food and energy, China's core inflation in July increased by 0.4% on month and the index continued to move up 0.8% on year, with the rise expanding by 0.1 percentage point from the prior month, NBS data showed.

On the other hand, the country's PPI extended the downward trend in July, with prices in some industries falling due to seasonal factors and uncertainties in global trade, Dong commented.

In July, domestic prices for the steelmaking and fabricating sector slid 0.3% on month and tumbled 10% on year, NBS data showed. "The hot and damp weather in summer slowed the working progress among building contractors and caused steel demand to decline," Dong said.

Meanwhile, the heavy rainfall across many regions of China boosted hydropower generation, leading to lower thermal coal prices as demand for thermal power weakens, Dong noted. Chinese prices for coal mining and processing fell 1.5% on month and plunged 23% on year in July, NBS data showed.

During January-July this year, China's CPI dipped 0.1% on year and its PPI fell 2.9%, according to NBS statistics.

Written by Anthea Shi, shihui@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com