China’s CPI inflation likely remained stable in August

China’s consumer price index inflation is likely to have remained stable in August, whereas the producer price inflation is expected to have improved in the month. According to a Societe Generale research note, the CPI inflation is likely to have stayed at 1.8 percent year-on-year, suppressed by weak food price inflation.

Wholesale prices of agricultural products increased due to supply constraints caused by poor weather conditions. However, the month-on-month rise in August was smaller than one year ago. In the meantime, non-food components are expected to have stayed quite stable.

According to the official manufacturing PMI survey, the input price index rose further for the second straight month to 57.2 in August from 54.6 in July. This might show another sequential gain in the producer price index, stated Societe Generale. Therefore, along with a favorable base effect, the contraction in the year-on-year rate is expected to continue to narrow significantly from -1.7 percent to -0.7 percent, added Societe Generale.