The consumer price index rose 2.5 percent from the same month a year earlier.
Consumer prices in China rose slower than expected in August, while producer inflation hit an 18-month low, indicating weak domestic demand in the world’s second-largest economy.
The consumer price index (CPI) rose 2.5 percent from the same month a year earlier, according to data from the National Bureau of Statistics (NBS) on Friday, down from 2.7 percent in July.
The Producer Price Index (PPI) rose 2.3 percent, the slowest pace since February 2021 and slower than 4.2 percent a month earlier, due to falling energy and commodity prices.
“Factory sales inflation will continue to decline through the remainder of the year, supported by the continued fall in commodity prices and a higher base of comparison,” Sheana Yue and Zichun Huang, analysts at Capital Economics, said in a research note.
“We think CPI inflation will remain below the NBK’s 3 percent ceiling,” they said, referring to the People’s Bank of China.
Official and private data point to a further loss of momentum in the Chinese economy in August, where weakness in the property market, containment measures against the spread of COVID-19 and power shortages have affected consumption and business activity.
The National Health Commission said China had 1,404 new cases of COVID-19 infection on Sept. 8, 301 of which were symptomatic, while Chengdu extended the quarantine for the majority of its more than 21 million citizens.
The slowdown in consumer price growth came as food prices rose 6.1% year-on-year in August from 6.3% in July and non-food prices rose 1.7% year-on-year. by 1.9% in July.
The core consumer price index, which excludes volatile food and energy prices, rose 0.8%, the same as in the previous month.
On a monthly basis, the CPI fell 0.1% from July after rising 0.5% in July from June.
Overall industrial product prices maintained their downward trend due to falling world prices for crude oil and non-ferrous metals, NBS said in a separate report.
While consumer inflation was approaching the government’s target of about 3 percent, it was still lower than in other major countries. In August, the PBOC said that China was facing increasing structural inflationary pressures, with consumer inflation likely to exceed 3 percent in some months in the second half of the year.
Analysts say slowing inflation could provide some room for further monetary easing.
“Thus, the PBOC will not be forced to further ease policy to support the economy,” Yue and Huang said. “The NBK cut most of its interest rates in August and we continue to expect further rate cuts throughout the rest of the year.”
China’s cabinet announced Thursday additional steps to stimulate investment, state media reported, expanding a range of measures to support the economy devastated by COVID-19.
“We expect further easing to come in the form of quantitative instruments to provide liquidity support, as well as structural instruments such as additional re-lending allowances for priority areas such as manufacturing and green investment,” said HSBC economist Erin Xin.
Credit: www.aljazeera.com /