China’s Inflation Shows Modest Rise in August Amid Economic Recovery


Experts Call for Further Economic Support as Consumer Demand Remains Weak

In August, China experienced a slight uptick in consumer prices, along with a less significant decline in factory prices, signaling potential economic stabilization. However, experts emphasize the need for additional measures to boost consumer demand, as job growth remains sluggish, and income uncertainties persist.

The Consumer Price Index (CPI), reflecting the cost of consumer goods, increased by a modest 0.1% in August compared to the previous year, falling short of the anticipated 0.2% rise.

July had witnessed a 0.3% decline in consumer prices. Meanwhile, core inflation, which excludes food and fuel, remained steady at 0.8% in August.

Conversely, the Producer Price Index (PPI), representing factory price levels. Exhibited a 3% decrease compared to the previous year, aligning with expert predictions and marking a less severe decline than July’s 4.4% drop. This suggests that factories are scaling back price reductions.

Analysts stress that while there are signs of improvement. The overall pricing data indicates persistent weakness in consumer demand, necessitating further government intervention to support the economy.

Food prices experienced a 1.7% decrease over the year, while non-food costs increased by 0.5%. Notably in sectors associated with tourism. Recent floods disrupted crops, leading to price increases for certain food items, such as an 11.4% monthly rise in pork prices.

However, pork prices remained 17.9% lower than the previous year, a milder decline than the 26% drop seen in July.

Unlike some major economies, China has refrained from raising interest rates to combat rising prices. A decision attributed to the unique circumstances of the COVID-19 pandemic.

The Chinese government has implemented various measures to stimulate economic growth, including facilitating easier access to home purchases. Additionally, experts speculate that the central bank may consider further interest rate reductions to bolster economic recovery.

Despite China’s leadership setting a growth target of around 5% for 2023. Uncertainties persist due to challenges such as a sluggish property market, subdued consumer spending, and decreased credit growth. Experts remain cautious about whether this target can be achieved.