Gasoline prices in China have risen sharply this summer, with analysts blaming high temperatures and frequent rainfall for the main reasons.
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BEIJING — China said Monday that its consumer price index rose 0.6 percent in August from a year earlier, below expectations as the cost of transportation, household goods and rent fell.
A Reuters poll showed the consumer price index was estimated to have risen 0.7 percent in August from a year earlier.
Food prices rose 2.8% year-on-year in August, the first positive growth since June 2023. Pork prices surged 16.1% in August, while vegetable prices rose 21.8%, according to data from Wind Information.
Pork, a staple food in China, accounts for a large proportion of the country’s consumer price index. Judging from the breeding cycle, pork prices may rise further in September and October but will face downward pressure for the rest of the year, said Wang Yifan, an agriculture analyst at South China Futures Exchange.
Core CPI, which excludes food and energy prices, rose 0.3% year-on-year in August, the second consecutive month of slowing growth.
The consumer price index rose 0.4 percent in August from the previous month, short of the Reuters forecast of a 0.5 percent increase.
In China, domestic demand has been sluggish since the pandemic began and consumer prices have remained sluggish.
Former People’s Bank of China Governor Yi Gang told a conference on Friday that China needs to focus on “fighting deflationary pressures.” He predicted the consumer price index would be slightly above zero by the end of the year.
Retail sales rose just 2.7% in July from a year earlier. Retail sales and industrial data for August are due to be released on Saturday.
“I believe a more aggressive fiscal policy stance is needed to prevent deflationary expectations from taking hold,” Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, said in a note.
Producer prices fall more than expected
The producer price index fell 1.8 percent in August from a year earlier, beating the 1.4 percent decline expected in a Reuters poll.
The oil, coal and other fuels industry reported prices fell 3% from a year ago, reversing a 4.3% increase in July.
Bruce Pang, chief economist and head of Greater China research at JLL, said downward pressure on the producer price index remained significant due to a lack of domestic demand and sluggish property prices.
He noted that major consumer price index items, excluding food, tobacco and alcohol, fell in August from the previous month, indicating that more efforts were needed to boost domestic demand.
—CNBC’s Aneek Bao contributed to this report.