Weak Inflation Data may Spur More Stimulus

China’s consumer inflation cooled slightly more than expected in June, pointing to lingering weakness in the economy which could prompt Beijing to launch further stimulus measures to shore up growth.

The consumer price index (CPI) rose 2.3% in June from a year earlier, down from 2.5% in May, the National Bureau of Statistics said yesterday. The producer price index (PPI) dropped 1.1% in its 28th straight month of decline, versus a market consensus for a fall of 1%, signaling that demand in the domestic economy remained lukewarm.

Most economists believe Beijing will roll out fresh stimulus measures in coming months to ensure 2015 economic growth meets its target of 7.5%, but they are divided whether it will stick to small-scale measures used so far or take more aggressive steps such as interest rate cuts or a nation-wide reduction in bank reserves.

~ SCMP, July 10, 2014 ~

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