China Faces Rising Inflation from Weather Disruptions, PPI Stuck in Deflation
China: Consumer inflation accelerated in August in China, with the Consumer Price Index (CPI) rising 0.6% from a year earlier, up from July’s 0.5%, driven by higher food prices due to extreme weather conditions, including deadly floods and heat waves. However, the uptick was not fuelled by a recovery in domestic demand, as producer price index (PPI) deflation worsened, with a 1.8% drop, the largest in four months. Food prices surged 2.8% year-on-year, while core inflation, excluding food and fuel, dropped to 0.3%, the lowest in nearly three and a half years. Dong Lijuan, an NBS statistician, attributed the higher CPI to extreme weather. China’s yuan weakened as inflation data fuelled economic concerns. Despite efforts like a 41 billion USD national campaign to spur consumer confidence, demand-led reflation remains elusive.
Source: Reuters