China Inflation Stays Subdued as Producer Prices Extend Decline
Bloomberg News
China's consumer inflation eased to a four-month low in August while factory-gate prices extended their decline to 30 months, adding room for government stimulus to support the economy amid a property slump.
The consumer price index rose 2 percent from a year earlier, the National Bureau of Statistics said in Beijing today, compared with the 2.2 percent median estimate in a Bloomberg News survey and 2.3 percent in July. The producer price index fell 1.2 percent, compared with projections for a 1.1 percent drop.
China's leaders are trying to achieve a full-year target of about 7.5 percent for economic growth while keeping CPI gains within 3.5 percent. Figures this week showed declining imports and a slowdown in money-supply expansion, pointing to weaker domestic demand and bolstering the case for additional measures to support activity.
'We expect inflation to remain under control,' Julian Evans-Pritchard, China economist at Capital Economics Ltd. in Singapore, said in a note before today's data release. 'Easing pressure on housing costs, weak commodity prices and a relatively neutral monetary policy stance should prevent inflation from getting out of hand.'
Analysts' estimates for August consumer inflation ranged from 2 percent to 2.7 percent. Projections for producer prices ranged from a 0.6 percent decline to a 1.3 percent drop, following a 0.9 percent fall the previous month.
The PPI fell for a 30th straight month, extending the longest streak since 1997-1999.
'Strong Stimulus'
'There's already a lot of money in the pool, and we can't rely on monetary stimulus to spur economic growth,' Premier Li Keqiang said Sept. 9, according to a Xinhua News Agency transcript of comments to business executives attending the World Economic Forum event in Tianjin.
'We do not want to rely on 'strong stimulus' to push forward economic development, but rely on 'strong reform' to invigorate the market,' Li said. He reiterated that growth can be slightly above or below the goal of about 7.5 percent.
Manufacturing (CPMINDX) expansion slowed in August, according to two gauges released respectively by the government and HSBC Holdings Plc. Imports unexpectedly dropped 2.4 percent in August from a year earlier, customs data showed, suggesting domestic demand remains subdued.
To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at xpi1@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net Scott Lanman, Nerys Avery
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