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The Consumer Price Index, published by the National Bureau of Statistics of China, increased by 0.2% in July after falling 0.1% the previous month. Analysts had expected an increase of 0.1%. In annual terms, the inflation indicator rose 1.8%. The pace of consumer price growth slowed slightly compared with +1.9% in June. The main factor that put pressure on the annual inflation was slowing food prices.
The result is a detailed summary of the data of urban and rural indices of consumer prices. The purchasing power of the Chinese currency is reduced under the influence of inflation. CPI - a key indicator of inflation and changes in purchasing trends. A decline in the consumer price index is a sign that inflation is becoming a destabilizing factor in the economy and could potentially provoke the People's Bank of China to tighten monetary policy and fiscal policy. In general, a high value is positive for China's currency.
Inflation remains well below the maximum target of 3% this year, giving the central bank room for easing monetary policy against the backdrop of the economic downturn.
Yu Qiumei, Senior Statistician at National Bureau of Statistics of China noted that a great influence on prices in the last month had heavy rains and flooding of the Yangtze basin. "Powerful rains significantly affected the processes of production and transport of fresh vegetables, which led to a rather strong increase in their prices in a number of regions".
Also, the National Bureau of Statistics of China released data on producer price index, which in July fell by 1.7% after falling 2.6% in June. Analysts had expected a decline to -2.0%
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