China Inflation Tops Forecasts

By Glenn Dyer | More Articles by Glenn Dyer

Inflation in China edged higher last month as the price of non-food items rose while growth in producer prices slowed for the first time since March.

China’s official consumer price index rose 2.1% compared to the July last year, up from 1.9% in the previous month, according to the National Bureau of Statistics.

That was above a median forecasts from a Reuters forecast for an unchanged reading of 1.9%.

The rise was driven by non-food prices which rose 2.4% compared to a year earlier thanks to higher fuel prices.

Food prices edged up half a per cent, thanks to another fall in pork prices (the most important food in China so far as the CPI is concerned).

Meanwhile, producer prices rose 4.6%, easing from 4.7% growth in June and the first slowdown since March.

There was nothing in this data to show any concerns about the health of the Chinese economy.

July figures for industrial production, investment (including real estate) and retail sales will be released next Tuesday.

Wednesday’s trade data showed no real problems from the trade war with the US and the most interesting data was the surge in iron ore and coal imports.

Chinese imports of LNG are also running at record levels (but not imports from the US).

Reuters reported that total natural gas imports – including pipeline gas and liquefied natural gas – rose to 7.38 million tonnes in July, up 28.3% from a year ago,

Year-to-date gas imports grew 34.3% to the end of July to 49.43 million tonnes.

But Reuters also reported that shipping data shows that US LNG sales to China have already slumped from almost 400,000 tonnes in May to just 130,000 tonnes in July, while supplies from Australia, Malaysia, Indonesia, Russia and Papua New Guinea have increased.

Now China is talking about slapping a 25% tariff on these imports from the US as part of its retaliation to US tariffs.

For the first seven months, China also imported 260.83 million tonnes, or 8.98 million bpd of crude oil, up 5.6% from a year earlier.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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