China: Inflation edges up to six-month high in August

Consumer prices rose 0.7% from the previous month in August, up from July’s 0.3% expansion. The increase was primarily driven by higher food prices, particularly for vegetables, which were affected by heavy rainfall and flooding.

Inflation ticked up to 2.3% in August from 2.1% in July, coming in above market expectations of 2.1% and representing a six-month high. In addition, annual average inflation inched up to an over one-year high of 2.0% in August from 1.9% in July.

Producer price inflation, meanwhile, slowed to 4.1% in August from 4.6% in July, just above market analysts’ expectations of 4.0%. Easing inflation came on the back of softer price increases in the means of production subcategory, which includes mining and quarrying, raw materials, and processing.

China Inflation Forecast

FocusEconomics Consensus Forecast participants expect that consumer inflation will average 2.1% in 2018, which is down 0.1 percentage points from last month’s estimate. For 2019, the panel sees consumer inflation at 2.3%. Meanwhile, the panel expects producer inflation of 3.3% in 2018, which is unchanged from last month’s projection. For 2019, panelists see producer inflation at 2.1%.