BEIJING- China’s consumer prices rose at a slower-than-expected pace in August while the rate of producer inflation hit an 18-month low, reflecting an economy plagued by weak domestic demand and leaving room for further central bank policy easing.
The consumer price index (CPI) increased 2.5 percent from the same month a year earlier, National Bureau of Statistics (NBS) data showed, slower than 2.7 percent in July and the 2.8 percent average forecast in a Reuters poll of analysts.
The producer price index (PPI) rose 2.3 percent, the slowest pace since February 2021, and slower than 4.2 percent a month prior and 3.1 percent in the poll, due to falling energy and raw materials prices.
“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 (PBOC).
Official and private data indicates further lost momentum in August in the world’s second-biggest economy, where property market weakness, COVID-19 containment measures and power shortages have dented consumption and factory activity.
There were 1,404 new COVID-19 infections in China on Sept. 8, 301 of which were symptomatic, the National Health Commission said, while Chengdu has extended a lockdown for the majority of its over 21 million citizens.
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 from July, after rising 0.5 percent in July from June, and compared with 0.2 percent forecast in the Reuters poll.
Overall industrial products prices maintained a downward trend due to falling prices in global crude oil and non-ferrous metals, NBS said separately.
Producer price inflation in oil and natural gas extraction slowed to 35.0 percent on year in August from 43.9 percent.
On month, the PPI fell 1.2 percent in August from July, when it declined 1.3 percent from June.
