THE country’s producer prices unexpectedly showed no growth in June from a year earlier, while consumer price growth in annual terms matched a 15-month high seen in May as supply shortages triggered by the African swine fever outbreak and extreme weather conditions continued to push up pork and fruit prices.

China’s producer price index (PPI) in June was flat from a year earlier, the National Bureau of Statistics (NBS) said in a statement. That compared with a 0.6 percent rise in May and a gain of 0.3 percent forecast by economists in a recent poll.

The change in the PPI was the lowest since August 2016 when the index last fell year on year.

A cooling in producer prices, seen as a gauge of industrial demand that gives momentum to investment and profits in the Chinese economy, may prompt the authorities to launch more stimulus.

Upstream sectors were particularly weak, with prices for oil and natural gas extraction down 1.8 percent from a year earlier, the NBS data showed. Price gains in the coal mining sector also eased.

China’s factory activity shrank more than expected in June as tariffs and weaker domestic demand hit new orders for goods.

China is fast-tracking more infrastructure projects but prices for some construction materials remain lackluster.

Spot prices for steel rebar in June lingered below the levels of a year earlier and may worsen in the following month due to seasonal slackening of construction activity amid high temperatures and rainfall in summer.

Factory prices of production materials dropped 0.3 percent year on year in June, compared with the 0.6 percent growth in May.

Among major industries, ferrous metals mining and dressing saw a price rise in June, jumping 18.5 percent from the previous year, according to the NBS.

A total of 18 sectors among 40 surveyed industries saw price hikes month on month, while 17 reported price drops and 5 witnessed unchanged prices.

Premier Li Keqiang pledged earlier this month to implement financing tools including reserve requirement ratio (RRR) cuts to support small and private firms, adding to expectations for further stimulus measures.

At the same time, however, he and other top policymakers have reiterated that China will not resort to large-scale stimulus.

The consumer price index (CPI) in June rose 2.7 percent in annual terms, driven by higher food prices. Fruit prices surged 42.7 percent from a year earlier while pork prices rose 21.1 percent.

Analysts polled expected consumer prices to rise 2.7 percent, matching the pace seen in May.

The food price index in June rose 8.3 percent year on year, picking up from May’s reading of 7.7 percent.

On a month-on-month basis, CPI fell 0.1 percent in June after remaining unchanged in May.

(SD-Xinhua)