China Inflation Slows; PPI Falls At Slower Pace

China's inflation eased in August on slowing pork price growth and factory gate prices continued to decline, but the pace of drop slowed from the last year.

Consumer price inflation slowed to 2.4 percent in August from 2.7 percent in July, the National Bureau of Statistics revealed Wednesday. The rate came in line with expectations.

On a monthly basis, consumer prices gained 0.4 percent.

Driven by slower growth in pork prices, food price inflation eased to 11.2 percent annually. Pork prices advanced 52.6 percent from last year, following an 85.7 percent rise in July.

Core inflation, which excludes food and energy prices, held steady at 0.5 percent in August.

Producer prices decreased at a pace of 2 percent on a yearly basis in August, as expected, following a 2.4 percent drop in the previous month, another report from the NBS revealed.

Looking through the volatility in food prices, the broader disinflationary impact from the COVID-19 downturn continues to ease, Julian Evans-Pritchard, an economist at Capital Economics, said.

Headline consumer price inflation probably has further to fall as pork supply continues to recover from last year's African swine fever outbreak, the economist noted.

But the bigger picture is that, with infrastructure-led stimulus still being ramped up, demand-side pressures on prices will probably strengthen in the coming months, pushing up underlying inflation, Evans-Pritchard added.