Consumer prices in China fell last month at their fastest rate in six months, official data showed Wednesday, as leaders struggle to reignite demand in the world鈥檚 second-largest economy.
Beijing has in recent years been battling sluggish domestic spending, dragged down by a prolonged slump in the country鈥檚 vast property market as challenges facing its exports mount.
The consumer price index 鈥� a key measure of inflation 鈥� dropped 0.4 per cent year-on-year in August, according to data released by China鈥檚 National Bureau of Statistics (NBS).
The figure was lower than the 0.2 per cent fall forecast in a Bloomberg survey of economists and marked the steepest decline since February鈥檚 0.7 per cent drop.
After a stable reading in July, the slip back into negative territory 鈥榬eflects volatile food prices鈥�, Zichun Huang, China economist at Capital Economics, wrote聽in a note.
鈥榃hile underlying inflation has actually ticked up lately, this mostly reflects temporary factors rather than any meaningful improvement in underlying supply-demand imbalances,鈥� she wrote.
As major Western economies grapple with the spectre of inflation, China鈥檚 leaders are attempting to counteract stagnant or falling prices.
The deflationary run dampens investor confidence and threatens Beijing鈥檚 official growth target for this year of around five per cent.
In another statement Wednesday, NBS statistician Dong Lijuan attributed the CPI鈥檚 year-on-year fall to a high base effect, in addition to food price increases that were 鈥榖elow seasonal levels鈥�.
Consumer prices in August 2024 crept up 0.6 per cent.
Factory gate prices also dropped last month, the NBS said, but at a slower rate than recent months.
The producer price index (PPI), which measures the prices of goods before they enter wholesale or distribution, fell 2.9 per cent, an improvement on the 3.6 per cent decline in July and in line with a Bloomberg forecast.
But the latest fall extends a years-long streak in negative territory stretching back to late 2022.
鈥榃ith weak domestic demand and persistent overcapacity, we doubt there will be much improvement in China鈥檚 deflationary environment in the near term,鈥� wrote Huang at Capital Economics.
China has struggled to maintain a strong economic recovery from the pandemic, as it fights a debt crisis in its massive property sector, chronically low consumption and elevated youth unemployment.
Official data this week showed exports in August expanded 4.4 per cent year-on-year but missed forecasts.
Exports to the United States 鈥� China鈥檚 largest single trading partner 鈥� continued to fall as trade tensions between Beijing and Washington simmered.
Beijing on Wednesday chided the use of 鈥榚conomic pressure鈥� after US president Donald Trump suggested he would hike tariffs on buyers of Russian oil to stifle Moscow鈥檚 funding for its war in Ukraine.
On Tuesday, in talks between US and European Union officials, Trump suggested he was willing to broaden tariffs on Russian oil buyers such as China and India 鈥� if the EU takes similar moves, a US official told AFP.
Dialling in for discussions, Trump raised the possibility of tariffs between 50 per cent and 100 per cent, said the official, who was not authorized to discuss these details publicly.
