August inflation hits 1.3%
China’s August inflation rate rose 1.3 percent compared to the same period last year, slightly lower than July’s 1.8 percent, the National Bureau of Statistics (NBS) said Friday.
Food prices were up 1.5 percent, contributing 0.43 percentage points to the overall inflation rate, NBS data shows. On a monthly basis, inflation was up 0.1 percent from July.
August inflation was largely below market expectations of 1.7 percent, Liu Dongliang, a China Merchants Bank analyst, told the Global Times on Friday.
NBS statistician Yu Qiumei attributed the moderate inflation mostly to food prices. NBS data shows pork prices rose 6.4 percent from the same period last year, down from the 16.1 percent growth in July. Fruit prices also dropped 0.6 percent, reversing the 0.5 percent growth in the previous month.
The rising Consumer Price Index (CPI) level in the first half of 2016 once triggered market worries about the possibility of stagflation, but the August data dispelled the concerns, Liu said.
“The inflation’s short-term fluctuation, largely stemming from extreme weather conditions and volatile pork prices, did not affect weak demand in general,” Liu noted.
But Liu said he predicts that August inflation would be the lowest level for the year. He added he expects to rise in September and to peak in October.
He also noted that inflation won’t have too much of an impact on monetary policies, and chances are the government would further relax monetary policies for the rest of the year.
The producer price index (PPI), which measures the average changes in prices received by domestic producers for their output, slipped 0.8 percent year-on-year in August, rising from the 1.7 percent drop in July.
Liu said that improved industrial production could suppress the need for new policies. However, factors such as the new round of estate purchase restrictions, insufficient fiscal spending in the second half of 2016 as well as rising prospects of a US interest rate hike could lead to additional policies.