China’s CPI Up 2%; PPI Declines 5.9% In August

China’s consumer price index (CPI) inflation climbed to 2.0% year-on-year in August, 0.4 percentage point higher than July and also higher than market expectations, largely due to rising food prices.

In particular, pork prices rose 19.6% year-on-year in August, contributing 0.59 percentage points to the headline inflation number.

Producer price index (PPI) remained negative for the 42nd consecutive month, at a decline of 5.9% year-on-year in August, down from a decline of 5.4% in the previous month, reflecting lower commodity prices and the weakness in industrial sector.

"The cyclical rise in pork prices and the recent RMB devaluation will not swing China’s price trend. While the headline CPI may rise modestly owing to surging pork prices, the underlying inflation, excluding pork, should remain subdued," says a research report by ANZ.

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