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China's July factory inflation slows

China's factory price inflation has cooled less-than-expected in July amid a wider slowdown in economic growth, as Beijing remains locked in a heated trade dispute with Washington.

However, consumer inflation picked up from the previous month, largely due to a rise in non-food prices, official data showed on Thursday.

The July inflation data is the first official reading on the impact on prices from China's retaliatory tariffs on $US34 billion of US goods that went into effect on July 6 and apply to a range of products from soybeans to mixed nuts and whiskey.

While policymakers are watching price pressures, the central bank is likely to give priority to policies that help shore up the slowing economy.

The producer price index (PPI) - a gauge of factory gate inflation - rose 4.6 per cent in July from a year earlier, down from a 4.7 per cent acceleration in June, according to China's National Bureau of Statistics (NBS).

Analysts polled by Reuters had expected July producer inflation would edge down to 4.4 per cent.

Raw material prices jumped 9.0 per cent in July from a year earlier, compared with an 8.8 per cent increase in June.

While the tit-for-tat tariffs between China and the US have fuelled worries about the inflation outlook, many analysts believe the impact on consumer prices will be limited.

The Trump administration tightened pressure for trade concessions from Beijing last week by proposing a higher 25 per cent tariff on $US200 billion worth of Chinese imports. China in turn retaliated by proposing tariffs on $US60 billion worth of US goods, ranging from liquefied natural gas (LNG), iron ore and steel to aircraft.

The consumer price index (CPI) rose 2.1 per cent from a year earlier, beating expectations of 1.9 per cent, but still within the government's comfort zone of 3 per cent.

The IMF said China's headline inflation is expected to rise gradually to around 2.5 per cent, while producer price inflation would moderate.

Austrlaian Associated PressBack to Breaking News

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