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China News Shows Inflation Slowing Again

Skerdian Meta•Monday, September 9, 2024•2 min read

Early this morning we had the Consumer Price Index (CPI) and Producer Price Index (PPI) in China news, which is price sensitive for commodity dollars. This comes after a bump in July’s inflation figures which were a result of the weather disruptions in supply lines that month.

China August CPI and PPI Inflation Reports

Focus on Chinese Inflation Data

The main event today centers on China’s inflation report, with the year-over-year Consumer Price Index (CPI) for August expected to rise to 0.7%, up from 0.5% in July. This uptick is partly due to weather disruptions impacting food supply chains. The month-over-month CPI is forecasted to remain steady at 0.5%. Despite these figures, China’s real interest rates remain relatively high, whereas the economy may benefit from much lower, or even negative, rates. Chinese officials have promised additional economic support, but action has been slower than anticipated.

Economic Challenges in China and Business Pressure

Recent data from the Caixin PMI highlights rising input costs across all sectors in China, yet manufacturers and service providers have been reducing their prices, intensifying pressure on business profitability. Even with Beijing’s efforts to stimulate the economy, challenges persist, including a prolonged housing slump and weak auto sales. Meanwhile, the People’s Bank of China (PBOC) held off on gold acquisitions in August, keeping reserves at 72.80 million troy ounces, which raises further questions about the strength of China’s economic response.

August CPI and PPI Inflation Reports from China

  • China August 2024 CPI YoY: +0.6% (vs. +0.7% expected)
    • July CPI YoY was +0.5%
  • China August 2024 CPI MoM: +0.4% (vs. +0.5% expected)
    • July CPI MoM was +0.5%
  • China August 2024 PPI YoY: -1.8% (vs. -1.4% expected)
    • July PPI YoY was -0.8%
  • China August 2024 PPI MoM: -0.7% (vs. -0.2% previous)

The August 2024 inflation data from China shows mixed results. The CPI figures indicate modest inflationary pressures, with YoY growth of +0.6%, slightly below expectations but still showing improvement from July. The MoM CPI also came in slightly lower than anticipated.

On the other hand, the PPI figures reflect ongoing deflationary pressures in the industrial sector, with a sharper-than-expected decline of -1.8% YoY, worsening from July’s -0.8%. The MoM PPI also fell more than expected, indicating a slowdown in producer prices.

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Skerdian Meta
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Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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