[1/3]Customers shop for groceries at a morning market in Beijing, China, on August 9, 2023.Reuters/Tingshu Wang/File photo Obtaining license rights
BEIJING (Reuters) – China’s consumer prices returned to positive territory in August, and the decline in factory prices eased on Saturday as deflationary pressure eased on signs of economic stabilization. Shown in data.
But analysts say more policy support is needed to stimulate consumer demand in the world’s second-largest economy amid a slowing labor market recovery and uncertain household income prospects. .
The Consumer Price Index (CPI) rose 0.1% in August from a year earlier, the National Bureau of Statistics said, slower than the median estimate of a 0.2% rise in a Reuters survey. CPI fell by 0.3% in July.
Core inflation, which excludes food and fuel prices, was flat at 0.8% in August.
The Producer Price Index (PPI) fell 3.0% year-on-year, in line with expectations, following a 4.4% decline in July. This was the largest decline in factory prices in five months.
“There is some improvement in the inflation situation. Meanwhile, the PPI deflation seems to be on the decline, indicating a slow and gradual recovery process,” said Zhou Hao, chief economist at Guotai Jun’an International.
“Inflation in general still points to weak demand and needs more policy support for the foreseeable future,” he said.
According to the bureau, food prices fell 1.7% year-on-year, while non-food costs rose 0.5% due to higher tourism-related costs.
Recent floods have damaged corn and rice crops in China’s main northern grain-producing region, raising concerns about domestic food inflation as consumers around the world face food supply strains from the war in Ukraine.
“The fourth quarter is likely to show a modest improvement in both CPI and PPI,” said Luo Yunfeng, an economist at Huajin Securities.
contraction pressure
According to the Statistics Bureau, the month-on-month CPI increase rate was 0.3%, up from 0.2% in July.
Due to the effects of abnormal weather in some areas, pork prices rose 11.4% from the previous month, but remained unchanged in July. Compared to the same month last year, sales decreased by 17.9%, down from a 26% decrease in July.
According to the Statistics Bureau, factory gate deflation eased in August due to improved demand for some industrial products and rising international crude oil prices.
China’s anemic price movements are in sharp contrast to the spikes in inflation that most other major economies have seen since the coronavirus pandemic subsided and central banks were forced to rapidly raise interest rates. target.
In July, China became the first G20 rich country to report a year-on-year decline in consumer prices since August 2021, when Japan’s headline CPI last turned negative.
August trade data showed both China’s exports and imports slowing their decline, suggesting the economic downturn may stabilize as policymakers seek to stimulate demand and avoid deflation. It joins a series of other indicators.
“We expect deflationary pressures to ease given early signs of growth stabilization, a trend reflected in the rise in commodity prices in August,” ANZ analysts said in a note.
China’s government has announced a series of measures to boost growth in recent months, including lower mortgage rates and easing borrowing regulations, which authorities announced last week to help homebuyers.
Bruce Pan, chief economist at Jones Lang LaSalle, said the People’s Bank of China may continue to lower interest rates and bank reserve requirements.
Premier Li Qiang said this week that China is on track to meet its 2023 growth target of around 5%, but some analysts believe that a worsening real estate recession, sluggish consumer spending and slowing credit growth will lead to a decline in growth. I believe that the goal may not be achieved.
Reporting by Kevin Yao and Joe Cash.Editing: Sam Holmes and William Mallard
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