China consumer prices rise less than expected, producer prices deflate

China's consumer inflation saw a modest increase in August, with the consumer price index (CPI) rising 0.6% year-on-year, up slightly from July’s 0.5%.

The rise was largely driven by higher food prices, which jumped 2.8%, fuelled by extreme weather, including floods and heatwaves that disrupted agricultural production.

However, the inflationary uptick did not necessarily signal broader demand recovery, as non-food inflation eased.

The data from China's National Bureau of Statistics showed that core inflation, which excludes volatile food and fuel prices, dropped to 0.3%, its lowest in over three years, indicating weak domestic demand.

Economists polled by Reuters had predicted a more significant rebound.

The producer price index (PPI) meanwhile declined 1.8% year-on-year in August, worsening from a 0.8% drop in July.

That marked the sharpest decline in four months, reflecting overcapacity in production that continues to outpace demand.

Reporting by Josh White for Sharecast.com.