Posted on 09 Jul 2013
China's annual inflation accelerated to 2.7% in June,
official data showed Tuesday, but analysts cautioned demand remained weak and
growth in the world's second-largest economy may have slowed further.
The year-on-year figure for the consumer price index (CPI) –
a main gauge of inflation – was up from 2.1% in May, the National Bureau of
Statistics (NBS) said in a statement.
It was higher than market expectations of 2.5% in a poll of
18 economists by Dow Jones Newswires.
Food price increases hit an annual 4.9% in June and remained
the main driving force of inflation, according to the NBS statement.
China has set its inflation target for 2013 at 3.5%, much
higher than last year's actual rate of 2.6%.
“Inflation is not a concern yet... and inflationary pressure
is mild and under control,” Sun Junwei, a Beijing-based economist with HSBC,
told AFP.
The Chinese economy grew only 7.8% in 2012, its slowest
annual pace in 13 years while it expanded 7.7% in the first three months of
this year.
Analysts expect growth in the second quarter to slow further
on weak domestic and foreign demand, as well as Beijing's determination to
carry out reforms to reduce the country's reliance on investment and exports.
A purchasing managers' index for China by British bank HSBC, which tracks manufacturing activity in factories and is a closely watched gauge of the health of the economy, hit a nine-month low of 48.2 in June, indicating further contraction.
“The recently released data showed that (growth in) the
second quarter was no better than the first quarter and a slowing trend has
apparently continued,” Sun said.
China’s producer price index (PPI), which measures the costs
of goods as they leave factories, fell 2.7% year-on-year in June, its 16th
straight month in negative territory, NBS data showed.
In the first half of the year CPI came in at 2.4% from the
same period in 2012, it said.
Bank of America Merrill Lynch economists Lu Ting and Zhi
Xiaojia expected authorities to keep monetary policy neutral with "neither
easing nor tightening".
“There will be no easing due to recognition of a slowdown in potential growth, the need for controlling debt growth and the task for taming rapidly (rising) home prices,” they said
