BEIJING (Reuters) – Consumer prices in China returned to positive territory in August, while the decline in producer prices slowed, as deflationary pressures eased amid a stabilization of the economy.
Data released by the National Bureau of Statistics (NBS) on Saturday showed that the consumer price index (CPI) rose 0.1 percent year-on-year last month, compared with a decline of 0.3 percent in July. . Analysts expected an increase of 0.2%.
The producer price index (PPI) fell to 3.0% on an annual basis in August – in line with analysts’ expectations – after a drop of 4.4% the previous month.
“There is a slight improvement in the inflation profile. At the same time, PPI deflation appears to be narrowing, indicating a slow and moderate restoration process,” said Zhou Hao, chief economist at Guotai Junan International.
“In general, the inflation rate still indicates weak demand and requires greater policy support in the short term.”
In July, China became the first G20 country to announce a year-on-year drop in consumer prices since Japan published a decline in August 2021.
Data released by Chinese customs on Thursday showed that exports and imports fell less than expected, which could bode well for a stabilization of the economic slowdown.
“With the first signs of stabilizing growth, we see deflationary pressures easing, a trend reflected in the rise in commodity prices in August,” ANZ analysts said in a note.
The Chinese government has implemented a series of measures in recent weeks to stimulate growth and combat deflationary pressures.
Analysts, however, say further measures are needed to boost consumer confidence as the labor market recovery slows and household income expectations are uncertain.
Chinese Premier Li Qiang said China is expected to achieve its growth target of around 5% for 2023.
However, some analysts fear that the worsening housing crisis, weak consumer spending and collapsing credit growth will prevent this result from being achieved.
(Reporting Joe Cash and Kevin Yao; Camille Raynaud)
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