China consumer prices picked up moderately in June, however wholesale prices remained entrenched in deflation, a sign of continued slack in the world's second largest economy.
China's consumer price index (CPI) rose 1.4 percent in June from a year earlier, beating expectations of a 1.3 percent rise as predicted in a Reuters poll and following a 1.2 percent rise in May.
The producer price index (PPI), however, slid 4.8 percent, worse than forecasts for a 4.5 percent fall and after a 4.6 percent decline in May. This marks its 39th consecutive month of declines, according to Reuters.
The continued PPI deflation suggests that overcapacity remains a serious problem and the process of deleveraging has a long way to go, said Li-Gang Liu, chief economist for Greater China at ANZ.
"As commodity prices fell again on Greek default and Chinese equity market rout, PPI inflation is unlikely to turn positive in the next two quarters," he said.
"Based on available data, we believe that China's gross domestic product (GDP) growth may have fallen below 7.0 percent in the second quarter," he added. The GDP data is scheduled for release on July 15.
China's economy grew an annual 7.0 percent in the first three months of the year, the worst showing since the first quarter of 2009.