Consumer inflation accelerated in China
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Extreme weather conditions this summer, from deadly floods to scorching heat, have pushed up farm prices and contributed to faster inflation. Chinese state media reported on Monday that the amount of crops damaged by various natural disasters in August reached 1.46 million hectares.
Food prices jumped 2.8 percent year-on-year in August, compared to unchanged results in July, while non-food inflation was 0.2 percent, up from 0.7 The percentage decreased in July.
According to economists, however, the rebound has been milder than expected and has not helped ease inflationary concerns. A major part of the improvements is related to the reduction of food prices, which are prone to fluctuations in weather conditions and capacity changes.
Core inflation, excluding volatile food and fuel prices, was 0.3 percent in August, the lowest rate in nearly three and a half years. The consumer inflation index rose 0.4 percent from the previous month, compared to a 0.5 percent increase in July and economists’ expectations of 0.5 percent growth.
The Chinese yuan also fell against the dollar as long-term yields after monthly inflation data added to economic concerns. reached its lowest point. A national campaign to allocate $41 billion in Treasury bonds to support equipment upgrades and the consumer goods business has been ineffective in boosting consumer confidence, and domestic auto sales fell for a fourth straight month in July.
Economists believe that these policies need time to have an effect, so it is obvious that we cannot expect inflation to improve yet.
Meanwhile, the producer price index (PPI) decreased by 1.8 percent in August compared to last year, which is the largest decrease in the last four months. This was more than the 0.8 percent decline in July and less than the 1.4 percent decline expected.
Economists say: in Capital Economics The increase in financial costs will increase domestic demand in the coming months; But the government’s policy is still biased towards investment, and therefore the increase in financial costs may ultimately exacerbate the problem of excess capacity.
Falling economic activity has prompted global brokers to cut their forecasts for China’s growth in 2024 below the official target of around 5 percent.
