Business & Economy

Inflation in China grows 2.4 percent year-on-year in August

Beijing, Sep 9 (efe-epa).- China’s Consumer Price Index (CPI), the main inflation indicator, grew 2.4 percent year-on-year in August against the 2.7 percent growth it posted in the previous month, the National Bureau of Statistics (NBS) said Wednesday.

The figure is in line with analysts’ forecasts and is the second lowest rate of the CPI since May, when the index was also 2.4 percent, its lowest level since March 2019.

The NBS also released data on the Production Price Index, which measures wholesale inflation and decreased by 2 percent year-on-year in August after recording a decline of 2.4 percent in July.

This figure confirms that the decline in wholesale prices continues to moderate after they fell by 3.7 percent in May and 3 percent in June. Analysts point to a recovery in industrial demand after a resumption in activity following the halt caused by the COVID-19 pandemic, which is seemingly already under control in the Asian country.

In a statement, NBS statistician Dong Lijuan said that government policies had resulted in outstanding results for the local economy and added that the overall market supply and demand were balanced.

The NBS’ data shows that, as in previous months, the main driver behind the inter-annual increase in the CPI was rising food prices, which increased 11.2 percent in August as compared to 13.2 percent in July.

The price of pork continued to rise, albeit moderately. It increased by 52.6 percent year-on-year last month after rising 85.7 percent year-on-year in July. Pork is one of the most sought-after products by Chinese consumers as its production has been affected since mid-2018 by an outbreak of African swine fever that decimated the pig population in the Asian country.

Prices of fresh vegetables also rose by 11.7 percent year-on-year in August while those of eggs decreased by 11 percent and fruit declined by 19.8 percent.

The NBS said that prices of non-food items increased by 0.1 percent year-on-year.

Among them, the prices of consumer goods increased by 3.9 percent while services decreased by 0.1 percent.

The CPI increased by 2.1 percent year-on-year in August in the urban areas of the Asian country while in rural areas it increased by 3.2 percent, according to NBS.

Analyst Julian Evans-Pritchard of the British consulting firm Capital Economics points out that August was the first month since the start of the pandemic that an increase in the basic CPI, which excludes the prices of food and energy, has been recorded.

In his view, this could mean that this indicator could have already hit rock bottom after steadily declining over half a year.

The fall in PPI moderated from 2.4 percent in July to 2 percent in August, which, seen from a closer perspective, represents a month-on-month increase of 0.3 percent.

Dong not only cited the recovery in industrial demand as a reason for this moderation in decline but also alluded to the recovery in international commodity prices.

Of the 40 industrial sectors measured by the NBS, 17 recorded price increases, 5 remained unchanged from the previous month and 18 recorded a price reduction.

The agency highlighted a decline in prices of industries that extract oil and gas (-25.2 percent) as well as those that process it (-16.7 percent).

Also notable was the 15.2 percent year-on-year decline in the prices of the chemical fiber industry.

Evans-Pritchard predicts a further slowdown in the CPI in the future due to the recovery of pork supply but also warns that core inflation will rise due to pressures on prices due to demand caused by the government’s economic stimulus, based on infrastructure projects. EFE-EPA


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