China's PPI-index slides to 6-year lows

BEIJING: Saddled with the economic slowdown, China faced deflation risk as the producer prices continued to fall in July, touching the lowest level since 2009. The producer price index (PPI), a measure of costs for goods at the factory gate, fell 5.4% year on year in July, widening from the 4.8% drop seen a month earlier, data from the National Bureau of Statistics (NBS) showed on Sunday. Specifically, prices of production materials fell 6.9%, while those of consumer goods edged down 0.3%. For the first seven months, PPI averaged at a 4.7% drop year on year. NBS statistician Yu Qiumei attributed the PPI contraction mainly to dropping prices of industrial products and decreasing costs for oil and natural gas production. “Domestic demand remained sluggish, and commodity prices were on the decline. China still faces grim deflation risk,” Qu Hongbin, chief China economist at HSBC said. In a sign of weak demand, China’s imports nosedived by 8.6% in July.