China inflation eases on falling meat prices

China’s consumer inflation eased in June on the back of falling pork prices, official data showed Friday, although factory gate costs remained elevated after a recent surge in commodity prices.

The world’s second-largest economy has largely bounced back from the coronavirus hit and factory gate inflation began to ease last month after surging at the highest rate in more than a decade earlier in the year as commodity prices spiked.

Factories so far appear to be absorbing the costs rather than passing them on to consumers, and analysts expect Beijing to protect shoppers from rising costs.

China’s consumer price index (CPI), a key gauge of retail inflation, rose 1.1% on-year in June – lower than analysts expected and down from the month before.

The low CPI inflation was “to a large extent driven by slumping pork prices,” Nomura chief China economist Lu Ting noted.