China consumer prices hit five-month high, topping forecasts
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Chinese officials have ramped up support measures for the private sector recently in a bid to stimulate activity and spur on household consumption.
PHOTO: EPA-EFE
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BEIJING - Chinese consumer inflation rose more than expected in July to hit a five-month high, data showed on Aug 9, providing some much-needed positive news on the world’s No. 2 economy.
The reading comes as the authorities struggle to kickstart activity among the country’s army of consumers, with officials last week issuing a set of directives aimed at boosting buying.
The 0.5 per cent increase in the consumer price index – the main gauge of inflation – was sharply up from the 0.2 per cent seen in June and marked the sixth straight month of increase, according to the National Bureau of Statistics (NBS).
China endured a period of deflation between October 2023 and January 2024 when sliding prices of goods and services heightened worries of an economic slowdown.
July’s reading – which beat forecasts in a survey by Bloomberg – represents the fastest rise in consumer prices since February, when the figure increased 0.7 per cent year on year.
Beijing has said it wants annual economic growth in 2024 of around 5 per cent, a target considered ambitious by many experts as the country is laden by prolonged debt crisis in the real estate sector and high youth unemployment.
To help the economy, the People’s Bank of China has cut interest rates in 2024 and ING’s Mr Lynn Song predicted more cuts could be in the pipeline.
“Conditions are in place to see inflation trend a little higher in the coming months, but it should not impede further monetary easing,” he said in a note.
“With low inflation and weak credit activity, domestic factors continue to favour further monetary policy easing. We continue to look for at least one more rate cut this year with the potential for more if global rate cuts accelerate.”
The NBS announced on Aug 9 that the producer price index – which measures the cost of goods as they leave factory gates – fell 0.8 per cent, a 22nd straight month of decline. Bloomberg had forecast it to drop 0.9 per cent.
The index provides an overview of the general health of the economy.
Chinese officials have ramped up support measures for the private sector recently in a bid to stimulate activity and spur household consumption.
Beijing recently published a list of 20 measures aimed at boosting spending, calling particularly for the promotion of entertainment, sports and tourism. AFP
