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China's July inflation rebounded to 2.7% y/y from 2.5% in June, hitting a three-month high as tight supplies of pork and vegetables pushed up food prices. Analysts had expected 2.6% y/y.
Factory-gate prices narrowed year-on-year falls to register a four-month high as the prices of oil-related products kept rising on rebounding crude oil prices.
Here are the key takeaways from data released by the National Bureau of Statistics on Monday:
- Food costs accelerated to 13.2% y/y from 11.1% in June, accounting for 2.68 percentage points of the CPI gain.
- On a monthly basis, the CPI rose 0.6%, reversing the four-straight-month decline, compared with the 0.1% decline over the previous month.
- Pork prices, the main inflation driver in the past year, rose 10.3% m/m, further extending the 3.6% gain in June, as floods in many places disrupted the transportation of hogs amid increased pork demand by restaurants.
- Vegetable prices also rose above trend due to hot and rainy weather, growing 6.3% m/m in July, compared with June's 2.8% gain.
- The PPI was -2.4% y/y, narrowing the 3.0% fall in June. The figure was better than the forecast of -2.5%.
- The PPI grew 0.4% m/m, keeping the same pace as in the June-May period, as international commodity prices continued to pick up and market demand gradually improved.