China consumer inflation rises to 2.0% in August: govt

[BEIJING] Consumer inflation in China rose to 2.0 per cent in August, the government said Thursday, its highest level in a year as the threat of deflation receded further in the world's second-largest economy.

The reading for the consumer price index, a main gauge of inflation released by the National Bureau of Statistics (NBS), was higher than July's 1.6 per cent and the strongest since a similar 2.0 per cent in August last year.

But producer prices fell at their fastest for nearly six years.

The NBS said the producer price index - a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI - declined 5.9 per cent in August, the worst since a 7.0 per cent fall in September 2009.

It was steeper than a 5.4 per cent retreat in July and marked the 42nd consecutive monthly drop.

Moderate inflation can be a boon to consumption as it pushes consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt economic growth.

Slowing economic growth and declines in commodity prices have helped keep China's consumer inflation in check, with some some economists even voicing concerns about possible deflation.

The CPI figure compared with the median estimate of 1.8 per cent in a survey of economists by Bloomberg News.

AFP