China's producer price inflation was unchanged in June and remained well off highs seen earlier this year, amid lingering oversupply issues in the steel sector and as signs of economic weakness weighed on the outlook for prices.
The producer price index (PPI) rose 5.5 percent in June from a year earlier, the National Bureau of Statistics (NBS) said on Monday. This was in line with analyst forecasts and unchanged from the previous month.
Prices of raw materials are making a modest recovery, helped by stronger futures prices in China over the past few weeks, after an earlier hit taken from a broader cooling in economic activity since March.
China's June consumer prices rose 1.5 percent from a year earlier, in line with market expectations and May's reading, the NBS said, with food prices continuing their declines albeit at a slower pace.
There are some concerns among analysts that price pressures could weaken throughout the rest of the year as economic fundamentals soften.
"The upshot is that, having eased in previous months, price pressures appear to have stabilized in June," Julian Evans-Pritchard from Capital Economics in Singapore wrote in a note.
"Nonetheless, with slowing credit growth likely to weigh on economic activity in coming quarters we think that, volatility in food prices aside, inflation still has further to fall. This will disappoint those hoping for a sustained period of reflation that could help to erode corporate debt burdens."
Food prices, the biggest component of the consumer price index, fell at a slower 1.2 percent from the previous year, after sliding 1.6 percent in May and 3.5 percent in April.
Tepid inflation comes despite signs of a pickup in factory activity. China's manufacturing sector expanded at the quickest pace in three months in June, buoyed by strong production and new orders.
China is targeting inflation of 3 percent this year.
