MNI DATA IMPACT:China June CPI Rebounds Slightly, PPI Improves

     BEIJING (MNI) - China's June inflation rebounded to 2.5% y/y from 2.4% in

May, reversing the five-straight-month deceleration as tight supplies of pork

and vegetables push up food prices. Analysts had expected 2.5% y/y.

     Factory-gate prices narrowed year-on-year falls and turned positive on a

monthly basis for the first time this year as the prices of oil-related products

reversed earlier falls on rising crude oil prices.

     Here are the key takeaways from data released by the National Bureau of

Statistics on Thursday:

     - Food costs accelerated to 11.1% y/y from 10.6% in May, accounting for

2.24 percentage points of the CPI gain.

     - On a monthly basis, the CPI fell 0.1%, the smallest decline in four

months, compared with the 0.8% decline over the previous month. 

     - Pork prices, the main inflation driver in the past year, rose 3.6% m/m,

reversing the 8.1% decline in May, as supply tightened on the slower slaughter

of hogs and reduced imports amid increased demand by restaurants. 

     - Vegetable prices also reversed the 12.5% m/m decline in the previous

month to grow 2.8%, largely due to floods in many provinces as well as the

epidemic outbreak in Beijing's biggest wholesale food market.

     - The PPI was -3.0% y/y, narrowing the 3.7% fall in May. The figure was

better than the forecast of -3.2%.

     - The PPI grew 0.4% m/m, hitting a near two-year high, reversing the -0.4%

in May-April, as international commodity prices picked up and domestic

manufacturing steadily recovered as market demand improved. 

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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