The biggest driving factor behind the non-food price surge last month appeared to be transport costs, which were 5.8 per cent higher than the same time last year. This followed a May increase of 5.5 per cent.

Consumer inflation in goods unrelated to oil and food – such as household items, clothing and health care materials – remained flat.

The rise in transport-related, fuel-price inflation was due to the “pass-through effects from higher global oil prices”, Nomura analysts said in a note.

Oil prices worldwide have been climbing for months amid a global recovery and nearly reached US$80 a barrel a few weeks ago after plunging to about US$20 a barrel in May 2020 as the pandemic shut down travel.

The situation was exacerbated last week following a regular monthly meeting held by the OPEC+ oil-producing cartel – a group of 24 oil-producing nations, comprising 14 members of the Organization of the Petroleum Exporting Countries (Opec) and 10 other non-Opec members, including Russia. Despite an agreement by members to increase output and temper oil prices, Saudi Arabia opposed the United Arab Emirates’ request for a bigger output quota, resulting in an impasse.

The stand-off between the two countries could continue to suppress oil supply and keep prices elevated.

“While some discuss the potential for the cartel to break ranks, and for a price war to emerge, in the short term its failure to open the taps leaves the world fretting about supplies just as summer demand and the world’s reopening kicks in,” Al Munro, a London Metal Exchange analyst with Marex Spectron, said in a note earlier this week.

Rystad Energy oil market analyst Louise Dickson said the OPEC+ cartel was the only group that could keep global supply balanced, so “a jettison of the current deal was rightfully spooking market participants”.

Consequently, the consumer prices for petrol, diesel and liquefied petroleum gas in China also jumped 24.3 per cent, 26.8 per cent and 11.1 per cent, respectively, in June, compared with a year earlier. Flight prices also rose 27 per cent.

“This pace of recovery is being felt across global energy markets. Growth in China’s demand for oil is supporting the recovery in crude prices, while an almost insatiable appetite for LNG [liquefied natural gas] helped push Asian spot prices to an eight-year seasonal high in recent days,” energy consultant Wood Mackenzie’s Asia-Pacific vice-chairman Gavin Thompson said in a note earlier this week.

And Wood Mackenzie’s senior economist for the Asia-Pacific region, Yanting Zhou, warned that this sort of runaway growth is not without consequences, particularly in the broader energy sector in China.

“The pace of growth has seen macroeconomic pressure building as high commodity prices stoke inflation, and as electricity supply struggles to keep up with soaring demand,” she said in a note. “Power shortages in Guangdong and Yunnan provinces worsened in May, due in part to strong manufacturing output in Guangdong and the start-up of several energy-intensive projects in Yunnan.

“These power shortages are starting to slow industrial output.”

Meanwhile, China’s factory-gate inflation – as opposed to inflation in consumer prices – remained high in June due to the soaring prices of industrial raw materials, NBS data released on Friday showed, falling slightly from the near 13-year high a month earlier.

The producer price index (PPI), which reflects the prices that factories charge wholesalers for their products, rose by 8.8 per cent in June from a year earlier, down from May’s gain of 9 per cent, which was a 13-year high.