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China consumer inflation steady in August; producer prices drop most in 3 years

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China consumer inflation steady in August; producer prices drop most in 3 years

China's annual consumer price inflation held steady in August, while producer prices fell at the fastest pace in three years, data from the National Bureau of Statistics showed.

The consumer price index rose 2.8% year over year in August, the same rate of increase as in July and higher than the Econoday consensus estimate of a 2.9% annual growth.

On a monthly basis, the index ticked up 0.7%, after a 0.4% rise in July.

Producer prices were down 0.8% year over year in August, following a 0.3% dip in the prior month. This was the sharpest annual decline since mid-2016. The Econoday consensus PPI estimate was for a 0.9% contraction.

While consumer inflation is expected to accelerate in the coming months, the rampant increase in food prices "is not a barrier to monetary easing," wrote Julian Evans-Pritchard, senior China economist at Capital Economics.

"[W]e continue to anticipate further loosening in the next few quarters as demand-side pressures remain muted and factory-gate deflation deepens," Evans-Pritchard added.

The People's Bank of China on Sept. 6 cut the the reserve requirement ratio for all banks by 0.5 percentage points to boost tapering economic growth.