BEIJING, July 10 Reuters China39;s producer prices fell at their fastest pace in over seven years in June, while consumer prices teetered on the edge of deflation, adding to the case for policymakers to use more stimulus to revive sluggish demand.

The worsening factorygate price deflation and the move by consumer prices towards deflation for the first time since February 2021 bode ill for China39;s economic growth.

Momentum in China39;s postpandemic recovery has slowed from a brisk pickup seen in the first quarter with demand for industrial and consumer products weakening, raising concerns about the health of the world39;s secondlargest economy.

We think the more challenging deflation environment and sharp slowdown in growth momentum support our view that the PBOC has entered a ratecutting cycle, said economists at Barclays in a research note.

The producer price index PPI fell for a ninth consecutive month in June, down 5.4 from a year earlier, the National Bureau of Statistics NBS said on Monday, the steepest decline since December 2015. That compared with a 4.6 drop in the previous month and a 5.0 fall tipped in a Reuters poll of analysts.

The consumer price index CPI was unchanged yearonyear, compared with the 0.2 gain seen in May, driven by a faster fall in pork prices. That dashed expectation for a 0.2 rise and was the slowest pace since February 2021.

Nomura expects consumer prices to fall 0.5 yearonyear in July, even taking into account a potential rise in…