China's August CPI Rose 2.8% as Pork Prices Surge

Andrew Cummings
September 10, 2019

According to the latest data published by China's National Bureau of Statistics (NBS) on Tuesday, the Chinese Consumer Price Index (MoM) came in at +0.7% in August vs. +0.5% exp and + 0.4% last while the Consumer Price Index (YoY) steadied at +2.8% last month vs. +2.6% exp and +2.8% booked in July.

The prices Chinese firms pay factories for their goods fell last month at the fastest pace in three years, official data showed Tuesday, as slackening demand and the bruising USA trade war drag on the economy. Pork prices soared 46.7 per cent, after an increase of 27 per cent in July, as swine fever decimates the country's herds.

The central bank on Friday cut banks' reserve requirements for the seventh time since early 2018 to free up more money for lending, and analysts widely expect it to cut some of its key lending rates next week to reduce corporate borrowing costs.

"The upward pressure for overall CPI this time will likely be visibly less severe than in numerous 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.


Tuesday's data also showed China's consumer price index, a main gauge of inflation, rose 2.8 percent year on year in August.

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

Overall meat prices, including pork, beef and mutton surged almost 31% in August, compared with July's 18.2% increase, as more consumers shifted to other meat items for protein. August's tally, the strongest monthly growth since mid-2011, lifted the headline consumer inflation by more than 1 percentage point in August.

Meanwhile, China's Producer Price Index (YoY) (August) arrived at -0.8% in vs. -0.9% exp and -0.3% last. The oil, coal and other fuel processing industries also saw price deflation worsening to 5.9 per cent in August.


The two sides have agreed to hold further discussions in Washington in early October, later than expected.

Analysts say China's economic growth has likely cooled further this quarter from a near 30-year low of 6.2% in April-June, and could test the lower end of the government's 6-6.5% 2019 target.

China's trade with the United States slipped by 1% in August, official figures showed on Sunday.


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