China’s consumer price index (CPI) rose further to 0.6% year-on-year in August, but missed market expectations (Bloomberg estimate: 0.7%; July: 0.5%). The rebound in food inflation was the driving force, which more than offset lower non-food inflation, said Ho Woei Chen, an economist at UOB Group.
General CPI rises less than expected
“China’s CPI rose in August, driven by a strong rebound in food prices, which turned positive for the first time since July 2023. Amid persistently weak demand, core inflation and services inflation moderated further, while PPI deflation widened sharply in August.”
“Taking into account higher food inflation, we are adjusting our headline CPI forecast upwards to 0.5% from 0.3% for 2024 (2023: 0.2%). However, we are revising our annual PPI forecast to -2.0% from -1.3% for 2024 as underlying demand has remained weak.”
“Easing domestic price pressures and monetary policy easing in developed economies have combined to support further easing by the PBoC. The near-term focus will be on a further reduction in banks’ reserve requirement ratio (RRR), with the aim of freeing up long-term liquidity to boost credit expansion, which had slowed considerably this year due to weak investment and mortgage demand.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
