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Mia Nulimaimaiti

Sylvia Ma

China’s consumer price growth fell short of expectations in August, extending over a year of economic weakness, with the softer than expected reading doing “little to ease deflation concerns,” analysts said.
The consumer price index (CPI), a key gauge of inflation, grew by 0.6 per cent year on year in August, compared to an increase of 0.5 per cent in July, the National Bureau of Statistics (NBS) said on Monday.
The reading fell short of the expected 0.71 per cent growth projected by economists polled by Chinese financial data provider Wind.
Meanwhile, China’s producer price index (PPI) – which measures the cost of goods at the factory gate – slipped by 1.8 per cent last month, falling for the 23rd consecutive month, compared with a fall of 0.8 per cent in July.
The reading was worse than the expected 1.4 per cent decrease projected by Wind.
According to chief NBS statistician Dong Lijuan, consumer demand witnessed seasonal growth and continued to expand year-on-year owing to the impact of rainfall and high temperatures.
Meanwhile, Dong attributed the continuous drop in factory-gate prices to “insufficient market demand and the downward trend of some international commodity prices”.


Tan Junyu, a regional economist for North Asia with credit insurance company Coface, said the CPI rebound was “softer than expected and did little to ease deflation concerns”.
“Volatile components aside, core inflation has not shown much sign of rebounding and has even deteriorated amid falling tourism expenses,” he said.
“Meanwhile, PPI deflation worsened more than expected with broad-based declines in fuel and metal prices.
“The ongoing deflationary pressures boil down into a broader problem of production surplus, which is still outstripping demand.”
And while recent stimulus appears to have shifted from investment to consumption, the policies would take time to filter through, with a demand-led reflation “not yet on the horizon”, he added.
Elsewhere, China’s core inflation, which excludes volatile food and energy prices, rose by 0.3 per cent last month compared to a year earlier.
On a month-on-month basis, China’s CPI in August remained positive after increasing by 0.4 per cent following a 0.5 per cent increase in July, according to the NBS.


CPI growth in the world’s second-largest economy has remained near zero for around 16 months, well below Beijing’s annual target of 3 per cent.
“Despite a weather-related surge in vegetable prices, a fall in energy prices and core inflation meant CPI only rose a touch,” said Gabriel Ng, an assistant economist at Capital Economics.
“Meanwhile, producer price deflation deepened on the back of worsening overcapacity.
“We think increased fiscal spending will boost domestic demand somewhat in the near-term. But with policy still too focused on the supply-side, deflationary pressures are likely to persist.”
Former People’s Bank of China governor Yi Gang last week had called on Beijing to address the falling prices by active fiscal policy and loose monetary policy.
“I think right now we should focus on fighting deflationary pressure,” Yi said at the Bund Summit in Shanghai on Friday.
“The immediate task is to turn the [gross domestic product] deflator positive in the short term. I know there are doubts and some people don’t agree, but we must try our best.”


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China’s consumer price index (CPI) grew by 0.6 per cent in August, with the reading falling short of the expectations


China’s consumer price index (CPI) grew by 0.6 per cent in August, with the reading falling short of the expectations.


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