BEIJING (Reuters) – Consumer prices in China returned to positive territory in August, while the decline in producer prices slowed, as deflationary pressures eased amid a stabilization of the economy.
Data released by the National Bureau of Statistics (SNB) shows that the consumer price index (CPI) rose 0.1% year on year last month, compared to a drop of 0.3% in July. Analysts expected an increase of 0.2%.
The producer price index (PPI) fell to 3.0% on an annual basis in August – in line with analysts’ expectations – after a drop of 4.4% the previous month.
“There is a slight improvement in the inflation profile. At the same time, PPI deflation appears to be easing, indicating a slow and moderate recovery process,” said Zhou Hao, chief economist at Guotai Junan. International.
“In general, the inflation rate still indicates weak demand and requires greater policy support in the short term.”
In July, China became the first G20 country to announce a year-on-year drop in consumer prices since Japan published a decline in August 2021.
Data released by China Customs on Thursday showed both exports and imports fell less than expected, which could bode for a stabilization of the slowing economy.
“With early signs of growth stabilizing, deflationary pressures are easing, a trend reflected in August’s rise in commodity prices,” ANZ analysts said in a note.
The Chinese government has implemented a series of measures in recent weeks to stimulate growth and combat deflationary pressures.
Analysts, however, say further steps are needed to bolster consumer confidence as the labor market recovery slows and household income expectations are uncertain.
Chinese Premier Li Qiang said China is expected to achieve its growth target of around 5% for 2023.
However, some analysts fear that the worsening housing crisis, weak consumer spending and collapsing credit growth could prevent this outcome from being achieved.
(Reporting Joe Cash and Kevin Yao; French version Camille Raynaud)
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