MNI DATA ANALYSIS: China June PPI Surges On Inputs, CPI Steady

     China's producer price index (PPI) rose sharply in June, up 4.7% on the

year, while the consumer price index (CPI) rose at a steady 1.9% over the year,

the National Bureau of Statistics (NBS) said Tuesday.

     --PPI HIGHER ON INPUT PRICES

     The PPI increased by 4.7% y/y in June, stronger than the market expectation

of a 4.5% y/y rise. The gain compared with the 4.1% y/y increase in May and

marked the highest reading in 2018.

     On a monthly basis, PPI grew 0.3% compared to the 0.4% growth in the

previous month, a second straight month in positive territory.

     The yearly increase was mainly on the back of the "rising production

materials price increase amounted to 6.1% y/y," senior NBS statistician Sheng

Guoqing said when reading the data.

     The carry-over effect in last June also pushed up the June reading. "The

tail factor impacted a 4.1% increase in the 4.7% yearly rise while the new-price

factor caused the other 0.6%," Sheng calculated.

     STEADY CPI, MODERATE INFLATION

     CPI in June increased 1.9% y/y, 0.1 percentage point faster than in May and

in line with MNI's survey. The m/m deceleration at -0.1% was lower than May's

-0.2%. In March, CPI fell 1.1% m/m.

     Food prices, recorded at 0.3% y/y, were up for the fifth month in a row,

underpinning inflation.

     Non-food prices, unchanged from last month's 2.2% y/y, extending the run of

2.0% or above readings to 19 consecutive months.

     CPI has been picking up in the first half of 2018, it may pick up again in

later this year, but will still be likely to hit the target of "being under 3%".

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$Q$$$]