China's inflation accelerated from a 30-month low in August, reducing possibilities of another monetary easing, while a weaker-than-expected industrial output growth put pressure for more stimulus.
Annual inflation rose to 2 percent, in line with expectations, from 1.8 percent in July, the National Bureau of Statistics said Sunday. This was the first increase in inflation since March.
Food inflation climbed to 3.4 percent from 2.4 percent. At the same time, non-food prices gained only 1.4 percent.
Month-on-month, consumer prices moved up 0.6 percent in August, the fastest increase since the start of the year.
On the other hand, the decline in producer prices deepened further. The producer price index declined by a faster-than-expected 3.5 percent from a year ago, compared to a 2.9 percent drop in July. Economists had forecast a 3.2 percent fall. On a month-on-month basis, the index slid 0.5 percent after easing 0.8 percent in July.
Industrial output grew 8.9 percent year-on-year in August, the smallest expansion since May 2009 and less than the 9.2 percent growth logged in July, the statistical office said in a separate report. It was also weaker than the 9 percent rise forecast by economists.
Meanwhile, retail sales improved 13.2 percent in August from last year, slightly better than the 13.1 percent growth marked in the previous month.
Also, the country's fixed-asset investment increased 20.2 percent from last year in the first eight months of the year, slower by 0.2 percentage points from the growth in the January to July period, the agency said.
The economy grew 7.6 percent in the second quarter, the weakest pace since the first quarter of 2009. The slowdown in major exports markets of China has dampened its future external demand stimulus.
Both government and central bank have initiated steps to put the economy back on the track. The government last week added stimulus worth more than CNY 1 trillion through the approval of a slew of infrastructure projects. It includes rail projects as well as highway construction.
Chinese President Hu Jintao yesterday warned that the economy is facing notable downward pressure. Speaking at the Asia-Pacific Economic Cooperation (APEC) forum in Russia, he said some small and medium enterprises are facing hardships and exporters are facing more difficulties.
It is an arduous task of creating jobs for new entrants, Hu added.
The People's Bank of China reduced the interest rates twice this year to counter a slowdown in economic growth. The central bank also reduced the reserve requirement ratio for commercial lenders three times since November last year.
by RTT Staff Writer
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