Meanwhile, China’s producer price index – which measures the cost of goods at the factory gate – fell 0.8% last month, marking the 21st straight month of declines, after also falling 1.4% in May.
The reading was better than the 0.82 percent decline forecast by Wind.
Elsewhere, China’s core inflation, which excludes volatile food and energy prices, rose 0.6% last month from a year earlier.
On a monthly basis, China’s consumer price index (CPI) in June remained negative after falling 0.2 percent following a 0.1 percent decline in May, according to the National Bureau of Statistics.
“The weak CPI data from China shows that the recovery in domestic demand is very limited. While the core CPI remains stable, the current price changes are too small to help lift sentiment,” said Gary Ng, chief economist at Natixis Corporate & Investment Bank.
“To achieve 5 percent [annual GDP] “For the government to achieve its growth target, it will need to consider more aggressive countercyclical policies that support demand rather than just supply. The challenge is particularly acute for the manufacturing sector given the risks of excess capacity.”
The world’s second-largest economy is experiencing its longest period of deflationary pressures since the global financial crisis in 2009, raising market concerns about whether Beijing can meet its target of 3 percent annual consumer price index growth.
“In June, the consumer market was generally well supplied, with the national CPI falling seasonally while continuing to rise year-on-year,” said Dong Lijuan, a senior statistician at the National Bureau of Statistics.
“Due to fluctuations in global commodity prices and insufficient domestic demand for some industrial goods, the national producer price index fell in June compared to the previous year, although the rate of decline continued to contract.”
Several Chinese utilities have raised prices for some services, including water, electricity and gas, amid rising cost pressures and tightening public finances.
However, the price hikes have a relatively limited impact on overall consumer prices, as they account for only about 5 percent of the CPI, according to the Bank of China’s third-quarter economic outlook report released in late June.
Bank of China economists expect consumer prices to rise 0.7% in the third quarter and 1.4% in the fourth quarter, with average annual growth of 0.6%.
“The upcoming summer holiday, Mid-Autumn Festival and national holidays are bright spots for tourism consumption, and residents’ willingness to spend on tourism, education and other services has increased, and service consumption prices will remain on an upward trend,” they said.