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China Inflation Steady At 2.8%; PPI Falls Further

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China's consumer prices climbed at a steady pace in August, while producer prices declined further on weak demand signaling deflationary pressures.

Consumer prices rose 2.8 percent year-on-year in August, the same pace of growth as seen in July, figures from the National Bureau of Statistics showed Tuesday. Economists had forecast the rate of inflation to slow to 2.7 percent.

Food prices surged 10 percent driven by pork prices. Meanwhile, non-food price inflation eased to 1.1 percent from 1.3 percent.

Excluding food and energy, core inflation came in at 1.5 percent versus 1.6 percent in July.

On a monthly basis, consumer prices gained 0.7 percent after rising 0.4 percent in July. This was the second consecutive increase in prices.

Another report from NBS showed that producer prices declined for the third straight month in August. Producer prices fell 0.8 percent annually after easing 0.3 percent in the previous month. Prices were expected to drop 0.9 percent.

Month-on-month, producer prices fell 0.1 percent after decreasing 0.2 percent in July.

Julian Evans-Pritchard and Martin Rasmussen, economists at Capital Economics, said RRR cuts announced last Friday are in line with the assessment that rampant food price inflation is not a barrier to monetary easing.

The economists continue to anticipate further loosening in the next few quarters as demand-side pressures remain muted and factory-gate deflation deepens.

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