China’s July inflation was within market expectation, indicating little inflationary pressure for China in the second half year, HSBC chief China economist Qu Hongbin said on Sunday.
China’s consumer price index (CPI), a main gauge of inflation, grew 2.3 percent year on year in July, the same as a month earlier, according to official data published on Saturday.
The inflation data in July were in line with market expectation, as survey data have been suggesting that consumer inflation was relatively stable, Qu said in an email.
The downturn in the housing market put additional downward pressure through residence-related inflation, although so far this has been offset by higher fuel cost, and core inflation, including food and energy, remained subdued, Qu said.
“We see little risk of an inflation overshoot in the second half. This is because the weakness in core inflation suggests that end demand is still quite weak…Inflation will likely remain anchored below the official target of 3.5 percent,” Qu aid.
In breakdown, food inflation was still the main driver, the same as that in June, up 3.6 percent year on year, slightly lower than 3.7 percent in June, according to Qu.
Within non-food inflation, fuel inflation went up 4.7 percent year on year in July, lower than 5.2 percent in June.
Meanwhile, house-related inflation moderated to 2 percent year on year from 2.2 percent in June, as rent inflation fell further to 2.8 percent from 3.2 percent in June.