No problems with consumer price inflation in China last month but producer prices remain in a state of deflation.
China’s National Bureau of Statistics said yesterday that producer prices (PPI) fell for the 7th month in a row, though the rate of fall eased from July.
The PPI fell 2% in the year to August, down from the 2.4% drop in July and the slowest rate of fall since March when the current bout of deflation was starting.
The improvement sits well with the stronger expansion noted in manufacturing by the two start of month surveys which confirm the economy is growing but fitfully so.
Exports are doing better than expected but commodity imports fell for a second month, but that seems to have been a result of a slowing in volumes after a buying spree at the start of the pandemic in March and April.
The PPI rose 0.3% in August from July which is a positive but was slower than the 0.4% rise in July.
Consumer price inflation meanwhile also eased to a 2.4% annual rate in August from 2.7% in July.
Pork prices have been the major driver of Chinese consumer inflation now for more than a year and the rate of growth slowed again in August from the same month a year ago.
Pork prices rose 52.6% in August from a year earlier, easing sharply from an 85.7% annual jump in July. They were up more than 110% earlier this year.
Core consumer inflation, excluding volatile food and energy prices, was up 0.5% in August from a year earlier, unchanged from July, suggesting domestic demand still remains weak.
On a month-on-month basis, core inflation rose 0.1% in August, the first monthly rise since January, but still soft.
“In August, industrial production continued to improve while market demand kept recovering,” said Dong Lijuan, a senior statistician with the NBS, in a statement accompanying the data release.
“Prices for global commodities such as crude oil, iron ore, and non-ferrous metals continued to rise, driving a rebound in domestic factory-gate prices.”