China’s rising food prices pushed up inflation to a one-year high in the world’s second largest economy.
The consumer price index (CPI) unexpectedly rose to 2% in August from a year ago, mainly on higher food prices and not due to a pickup in economic activity.
On the back of that, the producer price index (PPI) fell 5.9% – marking its 42nd consecutive month of declines.
Deflation fears in China are growing as manufacturers continue to cut prices.
The PPI decline was the biggest drop since the global financial crisis in 2009 due to falling commodity prices and slumping demand.
Economists said the continuing fall in producer prices poses the risk of trickling through to consumer prices.
Meanwhile, pork prices which weigh heavily on consumer prices in China, rose from 16.7% last year to 19.6% in August, while vegetable prices surged from 9.7% to nearly 16%.
Economists are expecting the government to step up with more policy measures to stimulate the economy.
Speaking at the World Economic Forum in Dalian on September 10, Chinese PM Li Keqiang was the latest policymaker to reiterate that the government will continue to support the economy to ensure stable growth.
China stock market returns to positive territory after massive losses there earlier in the week rocked markets around the globe.
The Shanghai Composite was up by 0.6% to 2,942.94 points.
The turnaround though does little to make up double-digit percentage losses made so far this week.
Shares elsewhere in Asia also made gains in early trade on the back of a jump on Wall Street on August 26, which saw its biggest rise in 4 years.
In other Asian markets on August 27, Hong Kong’s Hang Seng index was up by 2.5% at 21,613.48 points; the region’s biggest stock market, Japan’s Nikkei 225, finished trading 1.1% up at 18,574.44, building on strong gains made the previous session; South Korea’s Kospi also notched up gains for a second day. The index closed 0.7% higher at 1,908.0 points.
In Australia, the benchmark S&P/ASX 200 wrapped up the day 1.2% higher at 5,238.70 points.
Severe losses on the Chinese market over the past week had sent shockwaves around the globe.
A move by the country’s central bank, the People’s Bank of China, to cut its key lending rate on August 25 initially failed to calm the Chinese market.
Concerns about China’s slowing economic growth have been rising for months with a constant trickle of poor economic data, the latest of which last Friday suggested that factory activity shrank in August at its fastest pace in more than 6 years.
Analysts believe the tentative share market rebound indicates fears over China’s woes may have somewhat eased.