Consumer Inflation Cooled Down Further than Expected
Evidence has shown that the country’s consumer inflation has cooled down more than expected showing that the economy is losing its momentum, but financial experts are divided whether the government will be using this cooling down to release fresh stimulus measures. Consumer price index has risen 2 percent in August compared a year earlier, missing its market expectations of 2.2 percent and down 2.3 percent in July.
Producer price index also fell 1.2 percent, a 30th consecutive monthly declines in its weak economic conditions that continue to rob Chinese companies of their pricing power. Furthermore the market is expected to have a 1.1 percent decline after a drop of 0.9 percent in July. Consumer Pricing Index increased by 0.2 percent in August in the previous month around half of which economists has expected. Consumer inflation is well below the annual ceiling of 2.5 percent and the government along with the central bank is providing further stimulus when needed. But analysts doubt whether putting more money into the system will push the economy further or hinder it.
Inflation in China continues to trend down and analysts believe that deflation risk is increasing and the country needs to further increase their monetary policy. More importantly a soft Producer Price Index which indicates interest rates is now facing corporations that has pick up amid the slowdown.