China’s CPI rose in July by 0.2%

China’s consumer prices rose in July slower due to moderate growth of prices for food. It gives the PBOC more opportunities to stimulate the economy.

According to a report released this week, retail prices rose in July by 1.8% from a year earlier, and down by 0.1% from June. The inflation of retail prices demonstrated slowdown for the third month running. An upper limit of the inflation range is set at 3%. It means that the PBOC has quite enough space to maneuver, easing monetary policy on the background of economic slowdown. Yearly inflation matched the expectations.

China’s PPI fell in July by 1.7% from a year earlier. Experts forecasted the index to fall by 2.6%. The index has been remaining in a downward trend for four years. However, the downward impulse weakened this year.

The government has increased spending for infrastructural changes on the background of economic problems and has kept a soft monetary policy. Government members expect reservation rates for banks to be cut for two times by 0.5% and a rate cut by 0.25%. These steps will be implemented in order to support the economic growth and to achieve the growth by 6.5%. According to forecasts, the economy is expected to have the slowest growth this year for the last 25 years.