June CPI shrinks, indicates further policy easing

China's consumer price index (CPI), a main gauge of inflation, shrank slightly from May, the National Bureau of Statistics (NBS) announced Wednesday, prompting expectations of further policy easing in the second half of the year.

The CPI figure grew 2.3 percent year-on-year in June, down from 2.5 percent in May.

"The lower inflation rate in June was mainly because of the lesser impact from the carryover effects from last year, and fewer new factors for price gains compared to May," the Xinhua News Agency quoted Yu Qiumei, a senior NBS statistician, as saying.

China's producer price index (PPI), released by the NBS on the same day, dropped 1.1 percent year-on-year in June. The decline, however, narrowed from the 1.4-percent fall in May.

Although the data marked the 28th consecutive monthly decline, the narrowed drop reflected some "positive changes" in industrial sectors, Yu noted.

In the first half of 2014, average consumer inflation stood at 2.3 percent, far below the official ceiling of 3.5 percent set by the central government at the start of the year.

Analysts said the country does not currently face much pressure to control inflation.

"Inflation will not be a constraint for policy easing in 2014. More policy easing is expected to sustain the growth momentum in the second half," Chang Jian, China economist with Barclays Capital, told the Global Times Wednesday.

"We expect the government to accelerate fiscal spending and open up more infrastructure sectors to private sector participation," Chang said.

Weak inflation pressure indicates further policy easing, especially monetary policy, which will have more room in the months to come, Xu Gao, chief economist of China Everbright Securities, said in a research note sent to the Global Times on Wednesday.

"The June CPI figure is not as weak as that of April, easing the pressure on policy makers, so we expect no major policy adjustment in the future," Xu said.