Inflation in China accelerated in July to the highest level in two years, mainly due to the rising cost of pork, while weak consumer demand kept prices of other items stable.

The consumer price index (CPI) rose 2.7% in July from the same month a year earlier, with pork prices up 20.2%, according to data released today by the National Bureau of Statistics (NBS).

The CPI rise was slightly above the 2.5% recorded in June.

Producer price inflation decelerated to 4.2% in July from 6.1% in June, reflecting falling commodity prices.

In contrast to the United States and other major economies, consumer inflation in China has remained relatively subdued this year, as strict epidemic control policies have led to a drop in consumer and business spending.

These surges, coupled with a liquidity crunch in the real estate sector, have slowed the growth of China's economy. Manufacturing activity unexpectedly contracted last month and property sales continued to fall.

While rising pork prices are expected to boost the CPI this year, the most important items for inflation, which exclude volatile food and energy prices, remain subdued, registering a combined rise of 0.8% in July.

The increase in inflation in July was largely driven by rising prices for pork, fresh vegetables and other foods, along with seasonal factors, the GNE said in a statement, citing statistician Dong Lijuan.

General food prices rose 6.3% year-on-year in July, with pork prices posting the first increase since September 2020. Fresh fruits and vegetables rose by 16.9% and 12.9%, respectively.

Source: Lusa