CPI keeps pace with 2.3% rise in August

China’s consumer price inflation increased at a faster pace than the previous month for three straight months by August.

The Consumer Price Index, a main gauge of inflation, climbed 2.3 percent from a year earlier in August, faster than 2.1 percent for July, 1.9 percent for June and 1.8 percent for both May and April, the National Bureau of Statistics said yesterday.

Last month’s figure was the highest since February, when the CPI was up 2.9 percent year on year, driven mainly by Spring Festival holiday factors.

Sheng Guoqing, the bureau’s senior statistician, linked the higher inflation to a 2.5 percent rise in non-food prices that contributed to 1.98 percentage points of the overall CPI growth.

Sheng particularly highlighted the jumps in the prices of petrol and diesel of 19.8 percent and 22 percent respectively. 

Prices of tours, the health care sector and education services rose 5.6 percent, 4.3 percent and 2.8 percent, respectively, year on year, the bureau’s data showed.

Prices for dwelling-related expenses, including rents and utilities, rose 2.5 percent year on year.

Food prices rose 1.7 percent to lift the overall CPI growth by 0.33 percentage points.

The prices for eggs, fruits and vegetables went up 10.3 percent, 5.5 percent and 4.3 percent, together resulting in CPI rise of about 0.25 percentage points.

On a month-on-month basis, the CPI increased 0.7 percent from July, as food prices rose 2.4 percent from July.

Sheng said vegetable prices surged 9 percent from the previous month due to high temperatures and rainy weather, especially heavy rains in northeastern and eastern provinces.

The fresh vegetable prices surged more than 20 percent in Liaoning, Jilin and Shandong provinces, Sheng said.

Pork prices rose 6.5 percent month on month, as continuous hot summer days this year slowed pig growth and the African swine fever outbreak in some areas of China exacerbated pork supply, Sheng added.

As of September 1, China had culled more than 38,000 pigs nationwide due to the African swine fever.

“We think markets need to keep an eye on the development of African swine fever, but otherwise the inflation worries are overdone,” Asian investment bank Nomura said in a research note, shrugging off worries about rising inflation risk.

“Temporary rise of food prices and rents due to some supply and demand shocks could be short-lived, China’s overall CPI inflation risk is still muted and could decline back to around 2.1 percent in September,” the note reads.

China is aiming to keep annual CPI growth at around 3 percent this year, the same as the 2017 target.

The average year-on-year CPI growth for the first eight months stood at 2 percent, unchanged from the first seven months, according to the statistics bureau.

The Producer Price Index, which measures costs for goods at the factory gate, rose 4.1 percent year on year in August, slowing from the 4.6 percent increase in July.

Sheng said the carryover effect contributed to 3 percentage points of the PPI growth, and new factors that push up prices contributed 1.1 percentage points.

On a monthly basis, PPI edged up 0.4 percent in August, picking up from 0.1 percent in July.

For the first eight months of the year, PPI climbed 4 percent from the previous year. 

Raw material prices went up 7.8 percent year on year last month, compared with a rise of 9 percent in July.