China Inflation Rate at 10-Month Low of 1.3%


Consumer prices in China rose 1.3 percent year-on-year in August of 2016, slowing from a 1.8 percent rise in July while markets expected a 1.7 percent rise. It was the lowest inflation rate since October 2015 as the politically sensitive food prices increased by 1.3 percent while non-food cost rose at a faster 1.4 percent. Cost of consumer goods gained 0.9 percent and those of services advanced 2.1 percent.

Among food, prices rose for pork (+6.4 percent from +16.1 percent in July). In contrast, cost fell for: fresh vegetables (-3.9 percent from -4.3 percent), fresh fruit (-0.6 percent from +0.5 percent), tobacco (-0.1 percent from +0.2 percent), eggs (-7.4 percent from -2.0 percent) and milk (-0.6 percent from -0.4 percent).

For non-food categories, cost rose at a slower pace for most categories: clothing (+1.3 percent from +1.4 percent); rent, fuel & utilities (+1.5 percent from +1.6 percent), household equipment supplies and services (+0.4 percent from +0.6 percent) and education, culture and entertainment (+1.3 percent from +1.6 percent). While prices increased at a faster pace for other goods and services (+4.5 percent from +4.4 percent), cost was steady for healthcare (+4.3 percent). In contrast, downward prices pressures came from transport and communications (-1.2 percent from -1.6 percent).

For 2016, the government sets inflation target at around 3 percent.

On a monthly basis, consumer prices rose 0.1 percent, after gaining 0.2 percent in a month earlier and below market consensus of a 0.3 percent growth.

The producer prices dropped by 0.8 percent year-on-year in August, compared to a 1.7 percent decline in July while market estimated a 0.9 percent fall. It was the smallest decrease since April 2012. The index has been in a negative territory since March 2012.

Statistics China l Rida Husna | rida@tradingeconomics.com
9/9/2016 3:40:02 AM