Explainer | China inflation: 4 takeaways from August data as consumer prices returned to positive territory

China’s consumer price index (CPI) rose by 0.1 per cent from a year earlier in August, still well short of the control target of around 3 per cent growth for 2023

Producer price index (PPI) fell for 11th month in a row in August, but the 3 per cent fall from a year earlier narrowed from the decrease of 4.4 per cent in July

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China’s producer price index (PPI), which reflects the prices that factories charge wholesalers for products, fell for an 11th consecutive month in August. Photo: AFP

Published: 12:31pm, 11 Sep 2023

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1. China’s deflation pressure eases

China’s consumer prices returned to positive territory in August after the consumer price index (CPI) increased by 0.1 per cent in August from a year earlier, up from a fall of 0.3 per cent in July, according to data released on Saturday.

China’s headline CPI inflation turned positive in August “on narrowed goods price deflation, thanks to rising crude oil prices”, said analysts at Goldman Sachs.

Beijing has set a CPI control target of around 3 per cent growth for 2023.

Within CPI, food prices fell by 1.7 per cent, year on year, while non-food costs rose by 0.5 per cent.

“Headline CPI returned to positive year-on-year growth territory in August,” said Louise Loo, lead economist at Oxford Economics.

“This was supported by increases in tourism services, traditional Chinese medicine, and some food items including eggs, all of which slightly more than offset the large price declines in pork, vehicle fuels, and other various meat and poultry products.”

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