China’s consumer, factory prices slow as deflation pressure persists

BEIJING, Aug 9 - China's consumer and factory prices grew at a slower rate than anticipated in August, official figures revealed on Sunday, as the world's second-largest economy grapples with persistent deflationary pressures. The consumer price index, a primary indicator of inflation, declined to 0.5 percent year-on-year, falling short of the 0.8 percent forecast by a Bloomberg survey and marking the slowest increase since January.

The sluggish domestic consumption has long been a concern for Beijing, potentially undermining national growth while exports and select high-tech industries continue to flourish. Many economists argue that China must transition towards a growth model centered more on household spending than on the conventional drivers of recent years, such as real estate and infrastructure investment.

Data from the National Bureau of Statistics (NBS) also indicated that the producer price index, which tracks the cost of goods at the initial point of sale, expanded at a slower pace last month. July's producer price index rose 3.5 percent year-on-year, down from 4.1 percent in June and below the 3.8 percent forecast by Bloomberg.

"Economic momentum softened in (the second quarter) of 2026," stated Zhiwei Zhang, President and Chief Economist of Pinpoint Asset Management, in a commentary on Sunday's data. A gathering of the ruling Communist Party's influential Politburo in late July hinted at increased fiscal spending as a policy response, with Zhang adding that it would take a few months to gauge how this measure might stimulate domestic demand.

The recent figures follow two days after trade data for July disclosed a surge in exports and imports, driven by heightened overseas demand for AI-related technology products. This export boom has assisted China's massive manufacturing sector in navigating the prolonged decline in domestic spending.