China’s August consumer prices edge higher, factory price falls moderate
2023.09.08 22:54
© Reuters. Customers shop for grocery at a morning market in Beijing, China August 9, 2023. REUTERS/Tingshu Wang/file photo
By Kevin Yao and Joe Cash
BEIJING (Reuters) -China’s consumer prices in August returned to positive territory while factory-gate price declines slowed, data showed on Saturday, as deflation pressures ease amid signs of stabilisation in the economy.
The consumer price index (CPI) rose 0.1% in August from a year earlier, the National Bureau of Statistics said, slower than the median estimate for a 0.2% increase in a Reuters poll. CPI fell 0.3% year-on-year in July.
The producer price index (PPI) fell 3.0% from a year earlier – in line with expectations – after a drop of 4.4% in July.
“There is a bit improvement in the inflation profile. In the meantime, the PPI deflation appears to be narrowing, pointing to a slow and moderate restoring process,” said Zhou Hao, chief economist at Guotai Junan International.
“In general the inflation (rate) still points to weak demand and requires more policy support for the foreseeable future.”
China in July became the first of the Group of 20 wealthy nations to report a year-on-year decline in consumer prices since Japan’s last negative headline CPI reading in August 2021.
August trade data showed China’s exports and imports both narrowing their declines, joining a run of other indicators showing a possible stabilisation in the economic downturn, as policymakers seek to spur demand and fend off deflation.
“With early signs of growth stabilisation, we see deflationary pressures easing, a trend reflected in higher commodity prices in August,” ANZ analysts said in a note.
Beijing has announced a series of measures in recent months to shore up growth, including mortgage rate cuts and the easing of borrowing rules last week by the authorities to aid home-buyers.
But analysts believe more policy steps are needed to shore up consumer confidence, with a labour market recovery slowing and household income expectations uncertain.
Premier Li Qiang said this week that China is expected to achieve its 2023 growth target of around 5%, but some analysts believe the target could be missed due to a worsening property slump, weak consumer spending and tumbling credit growth.
