China’s consumer prices accelerated in August, PPI remained in deflation By Reuters

BEIJING (Reuters) – China’s consumer prices accelerated in August to the fastest pace in half a year on higher food costs due to weather disruptions, while output price deflation worsened as Beijing maintained its efforts to revive domestic demand.

A strong start to the second half of mounting pressure on the world’s second-largest economy to implement more policies amid a prolonged housing slump, persistent unemployment, debt problems and rising trade tensions.

The consumer price index (CPI) rose 0.6% year-on-year last month, up from a 0.5% increase in July, data from the National Bureau of Statistics (NBS) showed on Monday, but less than a growth of 0.7% forecast in a Reuters. survey of economists.

Extreme weather this summer, from deadly floods to scorching heat, has pushed up farm prices, contributing to faster inflation.

“The higher CPI in August was due to high temperatures and rainy weather,” NBS statistician Dong Lijuan said in a statement.

Food prices rose 2.8% year-on-year in August from an unchanged result in July, while non-food inflation was 0.2%, down from 0.7% in July.

Core inflation, excluding volatile food and fuel prices, was 0.3% in August, down from 0.4% in July.

The consumer inflation gauge rose 0.4 percent on the month, compared with a 0.5 percent rise in July and missing economists’ expectations for a 0.5 percent increase.

In unusually strong comments, China’s former central bank governor Yi Gang called for efforts to combat deflationary pressure at the Bund Summit in Shanghai last week.

A nationwide campaign to allocate $41 billion in ultra-long Treasury bonds to support equipment upgrades and consumer goods trades proved tepid in boosting consumer confidence, as domestic auto sales extended their decline for a fourth month in July.

Weakened economic activity prompted global brokerages to cut their growth forecasts for China for 2024 to below the official target of around 5%.

China has room to lower the amount of cash banks must set aside as reserves, a central bank official said Thursday.

The producer price index (PPI) in August fell 1.8 percent from a year earlier, the biggest drop in four months. That was worse than a 0.8% drop in July and below an expected 1.4% drop.