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Macro-economy

Economic Watch: China sees flat inflation growth in August

September 10, 2019


Abstract : China's consumer price index (CPI), a main gauge of inflation, rose 2.8 percent year on year in August, the National Bureau of Statistics (NBS) said Tuesday.

BEIJING, Sept. 10 (Xinhua) -- China's consumer price index (CPI), a main gauge of inflation, rose 2.8 percent year on year in August, the National Bureau of Statistics (NBS) said Tuesday.

The growth rate was unchanged from that in July.

Food prices grew 10 percent year on year last month, up from 9.1 percent in July, while non-food prices gained 1.1 percent, 0.2 percentage points lower than that of July.

Food contributed to 1.93 percentage points of the 2.8-percent growth, with pork, fruits and other main meat products registering double-digit year-on-year growth in August, said NBS senior statistician Shen Yun.

Due to shortage of supply, price of staple meat pork expanded its growth last month to rise 23.1 percent on a monthly basis, Shen said.

China has unveiled a slew of measures and incentives to stabilize hog production and pork supply. On Monday, work plans were released on offering subsidies from the central budget to large pig farms to support their facilities construction.

The moves came as China's pig supply had shrunk substantially due to multiple factors including African swine fever and higher costs of pig breeding, which pushed up pork prices.

Investment bank China International Capital Corporation Limited (CICC) said the recent surge in pork prices was in part attributable to the usual pre-mid-Autumn seasonality.

"The upward pressure for overall CPI this time will likely be visibly less severe than in many of the past food price inflation cycles, as soft aggregate demand growth may dampen non-food CPI and keep the spillover of food price inflation relatively limited," the note said.

China aims to keep consumer inflation at around 3 percent in 2019, according to a government work report.

Tuesday's data also showed that the CPI in urban and rural areas registered a year-on-year growth of 2.8 percent and 3.1 percent, respectively. The producer price index (PPI), which measures costs for goods at the factory gate, dropped 0.8 percent year on year in August.

Higher CPI than PPI usually indicates faster income growth for the household sector versus the corporate sector, and faster rural household income growth versus that of urban ones, CICC's macro team said in the note.

"These shifts may indicate more relative resilience for the demand of selected consumer sectors," the note said.


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