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Chinese Consumer price index increases 2.5 percent in the same month

, National Bureau of Statistics (NBS) data showed on Friday, slower than 2.7 percent in July

Chinese consumer prices rose at a slower-than-expected pace in August while producer inflation hit an 18-month low, pointing to weak domestic demand in the world’s second-largest economy.

The producer price index (PPI) rose 2.3 percent, the slowest pace since February 2021, and slower than 4.2 percent a month prior, due to falling energy and raw materials prices.

China economy
China’s consumer prices rose at a slower-than-expected pace in August amid weak domestic demand in the world’s second-largest economy [File: Tingshu Wang/Reuters]

“Factory gate inflation is set to fall further throughout the rest of the year thanks to a continued drop back in commodity prices and a higher base for comparison,” Capital Economics analysts Sheana Yue and Zichun Huang said in a research note.

“We think CPI inflation will remain below the PBOC’s 3 percent ceiling,” they said, referring to the People’s Bank of China.

Official and private data indicate further lost momentum in August in the Chinese economy, where property market weakness, COVID-19 containment measures, and power shortages have dented consumption and factory activity.

Policy easing

Slower growth in consumer prices came as food prices rose 6.1 percent on year in August, versus 6.3 percent in July, with non-food items at 1.7 percent from July’s 1.9 percent rise.

Core CPI, which excludes volatile food and energy prices, rose 0.8 percent, matching the previous month.

On a month-on-month basis, the CPI fell 0.1 percent in July, after rising 0.5 percent in July from June.

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