China's CPI picks up in July, PPI growth falls
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China's consumer price index (CPI), one of the main gauges of inflation, rose in July to its highest level since October 2008, boosted by rising food prices after widespread floods.
The CPI was up 3.3 percent in July from a year earlier, 0.4 percentage points higher than the rise in June, Sheng Laiyun, spokesman of the National Bureau of Statistics (NBS) said Wednesday.
It has exceeded the 3-percent full-year target ceiling the government set in March. The index rose 0.4 percent in July from June.
Food prices, which account for about a third of the weighting in calculating the CPI, climbed 6.8 percent in July, compared with June's increase of 5.7 percent.
Because of severe floods, vegetable prices surged 22.3 percent in July from a year earlier, grain prices were up 11.8 percent while poultry product prices rose 4.1 percent, Sheng said.
However, economists said the acceleration in CPI growth was a temporary result of the floods, which would gradually abate.
CPI growth would remain around 3.3 percent in August or September, but could fall back below 3 percent at the year end, Lu Ting, China economist of the Bank of America-Merrill Lynch, said in an e-mailed note.
"The global surge in wheat and barley prices should have limited impact on China as only 1 percent of China's wheat consumption is imported and China has a big reserve for 6-month of consumption," Lu said in the note.
The high growth of CPI in July was also a result of a lower comparison base last year, said Liu Yuanchun, deputy dean of the school of economics under the People's University of China. The CPI fell 1.8 percent year on year in July of last year.
The country's CPI gained 2.7 percent year on year in the first seven months of this year, 0.1 percentage points higher than the January-June figure, the NBS said.
Consumer prices for the full year would maintain a stable level based on a moderation in economic growth, government efforts to avoid possible inflation and growth slowdown of the producer price index (PPI), Sheng said.
The PPI, a major measure of inflation at the wholesale level, grew 4.8 percent year on year in July, 1.6 percentage points lower than in June and 2.3 percentage points lower than May, it said.
The PPI climbed 5.8 percent in the first seven months, compared with an increase of 6 percent in the January-June period.
