China’s inflation picks up in August but still below target

Beijing, China - China's consumer and producer prices rose slightly in August, according to official data released on Wednesday, but remained below the government's target, as the country continues to struggle with weak domestic demand following the end of the Covid-19 pandemic. The consumer price index (CPI) increased to 0.8% in August from 0.5% in July, in line with a forecast in a Bloomberg survey of economists.

China has been battling a persistent slump in domestic spending since the pandemic, with the CPI remaining below its current target of 2% for over three years and even dipping into negative territory at times. This weak activity has posed challenges for leaders trying to maintain growth momentum, even as exports and high-tech sectors continue to perform well.

Factory gate prices also increased in August, expanding 3.8% year-on-year, which was higher than the 3.5% increase in July and beat the 3.6% forecast in the Bloomberg survey. The data was released the day after figures showed that China's imports and exports surged last month, driven by robust global demand for technology products due to the ongoing artificial intelligence boom.

China aims for an economic growth rate of 4.5-5.0% this year, a pace that would outpace most developed economies but remains relatively low compared to China's historical standards. The economy expanded by 4.3% in the second quarter, missing forecasts and marking the slowest pace in more than three years.