China released data on Monday showing that the consumer price index (CPI) increased by 0.6% year-on-year in August, falling short of expectations due to declines in transportation, home goods prices, and rents. The CPI was anticipated to rise by 0.7%, according to a Reuters poll.
Despite a 2.8% increase in food prices year-on-year in August, led by significant surges in pork and vegetable prices, the CPI only saw a moderate growth.
Pork prices rose by 16.1% and vegetable prices climbed by 21.8%. Wang Yifan, an agricultural analyst at Nanhua Futures, predicted further increases in pork prices in September and October, with anticipated pressures for the remainder of the year.
The core-CPI, excluding food and energy prices, rose by 0.3% in August, marking a slower ascent for the second consecutive month. The overall consumer price index grew by 0.4% from July, falling short of Reuter’s estimated 0.5% expansion.
China’s consumer prices have been subdued due to lackluster domestic demand since the pandemic. Former central bank head Yi Gang emphasized the need to combat deflationary pressure, projecting that the consumer price index would hover slightly above zero by year-end.
Meanwhile, retail sales increased by a modest 2.7% in July from the previous year, prompting concerns about the economic outlook. Industrial data for August is set to be released on Saturday.
