China inflation accelerates more than forecast on food prices

China’s inflation accelerated more than estimated in June as food prices climbed, while the decline in factory-gate prices extended its longest streak in a decade amid slowing economic growth and lower commodity costs.

The consumer price index rose 2.7 percent from a year earlier, the National Bureau of Statistics said Tuesday in Beijing, compared with a median estimate of 2.5 percent in a Bloomberg News survey and a 2.1 percent gain in May. Producer prices fell 2.7 percent.

The lowest first-half inflation since the financial crisis in 2009 and prolonged factory-gate deflation underscore weaker demand that leaves the government at risk of missing its annual growth target for the first time since 1998. Premier Li Keqiang is trying to focus on spurring longer-term expansion by restructuring the economy and curbing the state’s role.

Estimates for June consumer inflation in a Bloomberg News survey of 40 analysts ranged from 2 percent to 3 percent. The government in March said it would aim to keep price gains to about 3.5 percent this year.

Prices of food rose 4.9 percent from a year earlier in June, the statistics bureau said Tuesday, after a 3.2 percent gain in May.

The decline in producer prices compares with the median estimate for a 2.6 percent drop in a Bloomberg survey. The index has fallen for 16 straight months, the longest stretch of declines since 2002. 

(Bloomberg)