Influenced by factors such as the decline in food prices, the year-on-year increase in CPI in June once again experienced a decline.

The National Bureau of Statistics released the national CPI (Consumer Price Index) and PPI (Producer Price Index for industrial products) data for June 2024. In June, the CPI rose by 0.2% year-on-year, with the increase narrowing by 0.1 percentage points compared to the previous month; the PPI decreased by 0.8% year-on-year, with the decrease narrowing by 0.6 percentage points compared to the previous month.

Looking at the year-on-year comparison, the CPI increased by 0.2%. Among them, food prices fell by 2.1%, with the decrease widening by 0.1 percentage points compared to the previous month. Within the food category, the price of fresh vegetables, which had increased by 2.3% the previous month, turned to a decrease of 7.3%; the prices of tubers, fresh fruits, eggs, beef, mutton, and poultry continued to decline, with the decrease ranging from 2.3% to 18.6%; the price of pork increased by 18.1%, with the increase widening by 13.5 percentage points compared to the previous month.

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The widening decrease in food prices is the main reason for the decline in the year-on-year increase in CPI. Although the year-on-year and month-on-month increases in pork prices have both risen, the seasonal downward trend in vegetable prices has dragged down the overall food prices. In addition, the narrowing increase in energy prices and the widening decline in car prices have led to a lack of strength in the rise of non-food prices.

Zhang Yu, the chief macro analyst at Hua Chuang Securities, analyzed that the wholesale price of pork has soared by 16.1%, driven by factors such as the gradual emergence of capacity reduction, bullish sentiment, and the entry of secondary breeding; the wholesale prices of vegetables and fruits have seasonally fallen by 6.8% and 1% respectively; the improvement in processing demand, coupled with the impact of high temperatures on egg production rates, has led to a 3.5% increase in the wholesale price of eggs. In terms of energy, international oil prices have fluctuated and weakened, leading to a slight downward trend in refined oil prices.

Regarding the trend of CPI in the next phase, Wang Qing, the chief macro analyst at Dongfang Jincheng, stated that since the middle and late June, pork prices have tended to stabilize, which is due to the limited capacity reduction of this round of live pigs, indicating that it will be difficult for the year-on-year increase in pork prices in July to further expand. However, as the base period of the same period last year decreases, the year-on-year decrease in prices of vegetables, fruits, and others is expected to narrow. In addition, during the summer vacation, there will be a significant increase in service prices on a month-on-month basis, but the high base period prices of the same period last year may suppress their year-on-year increase. Against the backdrop of overall weak consumer demand, the CPI in July will continue to operate at a lower level.

Liu Aihua, the spokesperson of the National Bureau of Statistics, recently stated at a press conference held by the State Council Information Office that regarding the trend of CPI in the next phase, from the current understanding of the price trends of food, industrial consumer goods, and services, the CPI will continue to rise moderately. Looking at food, as seasonal fruits and vegetables are widely marketed, food prices will remain at a seasonal low. Looking at industrial consumer goods, the overall supply is sufficient, which is conducive to price stability. Looking at services, as the demand for services further recovers, service prices are expected to continue to rise. Overall, the CPI in the next phase will continue to show a moderate upward trend.

The report from the National Economic Research Center of Peking University believes that affected by policies to promote the release of consumer demand and the low base effect, the overall CPI is in an upward trend, there is certain pressure in the price of consumer goods, and the service price mainly depends on the recovery situation of demand. It is expected that the year-on-year growth rate of CPI in 2024 will be higher than the previous year, at about 0.6%.

In terms of PPI, in June, influenced by factors such as fluctuations in international commodity prices and insufficient market demand for some domestic industrial products, the national PPI decreased on a month-on-month basis, and the year-on-year decrease continued to narrow.

Looking at the year-on-year comparison, the PPI decreased by 0.8%, with the decrease narrowing by 0.6 percentage points compared to the previous month. Among them, the price of means of production decreased by 0.8%, with the decrease narrowing by 0.8 percentage points; the price of consumer goods decreased by 0.8%, with the decrease remaining the same as the previous month. Looking at the month-on-month comparison, the PPI turned from an increase of 0.2% in the previous month to a decrease of 0.2%. Among them, the price of means of production turned from an increase of 0.4% to a decrease of 0.2%; the price of consumer goods decreased by 0.1%, with the decrease remaining the same as the previous month.Zhang Yu analyzed that, mainly driven by the low base effect, the year-on-year decline in the PPI narrowed in June. Looking at the month-on-month comparison, the prices of upstream bulk commodities weakened, with non-ferrous metals and crude oil prices fluctuating at high levels. The insufficient recovery of market demand, coupled with the impact of heavy rainfall in the south, led to a decrease in coal and steel prices, and the overall level of manufacturing prices fell back.

Liu Aihua stated that, although there is still uncertainty in international bulk commodity prices in the next phase, as domestic large-scale equipment updates and consumer goods replacement policies gradually take effect, they will provide certain support for the prices in some industries. At the same time, as we enter the "peak summer" period, the demand for electricity coal is boosted, and coal prices are expected to continue to rise. Overall, it is anticipated that the year-on-year decline in the PPI will continue to narrow in the next phase.