Wednesday, October 16, 2019
Martin Hennecke

China food costs soar as PPI flatlines
<p>China&#39;s consumer price index in June rose 2.7 percent year-on-year, the fastest in the past 12 months, with food prices rising 8.3 percent, the National Bureau of Statistics said yesterday. Fruit prices surged 42.7 percent from a year earlier while pork prices rose 21.1 percent.</p><p>Core inflation that strips out volatile food and energy prices was at 1.6 percent in June from a year earlier, the same annual pace as in May.</p><p>However, China Agri-Industries (0606) issued a profit warning yesterday. The subsidiary of top Chinese grains trader COFCO expects to record a 42.67 percent decline in net profit to HK$430 million in the first half, affected by African swine fever and narrowing average profit margin of the domestic oilseeds processing industry.</p><p>Meanwhile, China&#39;s producer prices flatlined in June on lower oil prices and weak global demand, fueling concerns that a slowdown in manufacturing from the trade war will further drag on growth.</p><p>The producer price index showed no growth in June from a year earlier, the lowest since August 2016. Factory gate prices slowed from May as well, falling 0.3 percent.</p><p>Also, China&#39;s interbank trading platform has introduced trading alerts to prevent money market rates from falling below specific levels, three sources with direct knowledge said yesterday, following a recent plunge in some short-term rates.</p><p>The move comes a day after the People&#39;s Bank of China said lending and borrowing rates in short-term markets should not fall below the rate it offers on excess cash that banks park with the central bank &quot;under normal circumstances&quot;.</p><p>Elsewhere, automobile sales in China fell 9.6 percent in June from the same month a year earlier, the country&#39;s biggest auto industry association said yesterday, marking the 12th consecutive monthly decline in the world&#39;s largest vehicle market.</p>

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