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| A woman walks by a sale advertising poster in Beijing, capital of China, May 11, 2010. (Xinhua/Xing Guangli) |
BEIJING, July 15 (Xinhua) -- China's consumer price index (CPI), the main gauge of inflation, rose 2.9 percent year on year in June, the National Bureau of Statistics (NBS) said Thursday.
The June figure was down from the 3.1 percent rise in May and below market estimates that ranged from 3.1 percent to 3.5 percent.
Consumer prices in June fell 0.6 percent from May, the NBS said.
The inflation rate stood at 2.6 percent for the first half of the year compared with the same period last year, according to the NBS, below the 3 percent full-year target ceiling the government set in March.
In the first six months, consumer prices in China's urban areas increased 2.5 percent while in rural regions they increased 2.8 percent. Food prices, which have a one third weighting in CPI calculations, gained 5.5 percent during the period.
In June alone, food prices rose 5.7 percent year on year, according to the NBS.
"China's inflation in the first half was mild and within a manageable range," NBS spokesman Sheng Laiyun told reporters at a news conference.
Sheng said it was not the time to be complacent about inflation, despite a slowdown in inflation to below 3 percent.
Zhu Baoliang, chief economist at the State Information Center, said China is not facing big inflationary pressures because of the fall in home prices on a monthly basis in June, the slowing in money supply growth and a decline in international commodity prices.
Housing prices in China's major cities fell 0.1 percent in June compared to May. The growth rate for housing prices in June slowed to 11.4 percent on a year-on-year basis from 12.4 percent in May and 12.8 percent in April on a series of government measures designed to cool the property market.
China's broad money supply (M2), which covers cash in circulation and all deposits, had increased 18.5 percent year on year at the end of June, down from the 21 percent year-on-year growth rate recorded at the end of May.
New yuan-denominated lending in June fell to 603.4 billion yuan (88.7 billion U.S. dollars), down from 639.4 billion yuan in May.
Wang Qing, Morgan Stanley's Hong Kong-based economist, said in a note to clients that the earlier-than-expected decline in CPI inflation primarily reflected a sharp month on month decline in vegetable prices.
"While we do not think the decline in vegetable prices would be sustainable, this development is consistent with our assessment that the underlying inflationary pressures have started to ease," he said.
"We reaffirm our call for the headline year-on-year inflation to peak in July and start to edge down over the rest of the year," he said.
China's Producer Price Index (PPI) rose 6.4 percent year on year in June, lower than the PPI growth of 7.1 percent in May, Sheng said.
For the first half, the PPI rose 6.0 percent year on year, Sheng added.
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