China Inflation


Inflation hits a one-year-high in August

In August, consumer prices rose 0.5% over the previous month, which was up from the 0.3% increase tallied in July. The monthly reading mainly reflected a sharp increase in prices for food, particularly for pork and fresh vegetables.

Inflation rose from 1.6% in July to 2.0% in August. The print overshot the 1.8% that market analysts had expected and represented the highest reading since August 2014. Despite the increase, the trend remained stable in August, with annual average inflation remaining at the previous two months’ 1.5%.

Meanwhile, the producer price index fell 5.9% in August over the same month last year (July: -5.4% year-on-year). The print exceeded the 5.6% decline that market analysts had expected and represented the sharpest drop since September 2009. The annual average variation of the producer price index decreased from minus 3.7% in July to minus 4.1% in August, which represented the lowest value since February 2010.

The government set an inflation target of 3.0% for 2015. FocusEconomics Consensus Forecast participants expect that inflation will average 1.5% in 2015, which is unchanged from last month’s estimate. In 2016, the panel sees inflation edging up to 2.0%. Meanwhile, the panel expects producer prices to decline 4.1% in 2015, which is down 0.3 percentage points from last month’s projection. In 2016, panelists see producer prices falling 1.3%.

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China Inflation Chart

China Inflation August 2015

Note: Year-on-year and annual average variation of consumer price index in %.
Source: National Bureau of Statistics of China (NBS).

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