China's consumer price inflation slows in August

Consumer price inflation declined to 2.5% on the year from 2.7% in July, coming in below consensus expectations of 2.8%. This was driven by a moderation in food price inflation, which dropped to 6.1% from 6.3%.

Meanwhile, producer price inflation fell to 2.3% in August from 4.2% a month earlier, versus consensus expectations of 3.1%. It marked the slowed pace since February 2021.

Core CPI, which excludes food and energy prices, came in at 0.8%, in line with July.

Capital Economics said: "Consumer price inflation fell in August and remains below the People’s Bank of China’s preferred ceiling of 3%, leaving room for the Bank to ease policy further.

"Meanwhile, producer price inflation declined to its lowest in 18 months. We expect both inflation measures to continue falling over the rest of the year."

Craig Botham, chief China+ economist at Pantheon Macroeconomics, said: "Further falls in CPI inflation are likely, with demand again choked by tighter zero-Covid restrictions, which will remain in place until the 20th Congress concludes in late October.

"Food and energy inflation should have peaked, based on global prices, and recent interventions in the domestic market. Falling PPI inflation is also likely to show up in goods inflation in the coming months."