China's consumer price index (CPI) and producer price index (PPI) are showing a notable recovery. The National Bureau of Statistics of China announced on September 9 that the CPI for August rose by 0.8% compared to the previous year. This marks an increase of 0.3 percentage points from July's 0.5% and slightly exceeds the Reuters forecast of 0.7%. The CPI also increased by 0.4% from the previous month.
The rise in the CPI for August is primarily attributed to an increase in energy prices, which surged from 0.6% in July to 4.1% in August. Gasoline prices rose by 9.3%. Excluding energy, the prices of industrial consumer goods increased by 1.8%, with the growth rate expanding by 0.3 percentage points from the previous month. Prices for computers rose by 19.6% and smartphones by 11.0%, influenced by rising semiconductor prices. Meanwhile, food prices fell by 1.4%, continuing a downward trend, particularly with pork prices dropping by 11.8%.
The PPI for August increased by 3.8% year-on-year, up from 3.5% in July and slightly above the Reuters estimate of 3.6%. Significant increases in PPI were recorded in sectors such as coal mining, refining, energy, chemicals, electronics, and machinery, while prices in the automotive, pharmaceutical, food, and agricultural sectors declined.
The recovery in China's PPI is believed to be a result of government policies aimed at curbing excessive competition, known as 'neijuan' (内卷). Chinese companies have engaged in price-cutting competition to secure market share amid oversupply, which has long suppressed PPI. Since the beginning of this year, Chinese authorities have introduced policies targeting overproduction and price competition in key industries such as steel, solar energy, automobiles, and batteries. As a result, companies are refraining from excessive price reductions, leading to a rebound in product release prices.
The National Bureau of Statistics stated, "The core CPI, excluding food and energy prices, has risen by 1.0% year-on-year, continuing its recovery. Additionally, the rise in international raw material prices and the advancement of industries within China have contributed to the upward trend in PPI."
* This article has been translated by AI.
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