MNI: China Aug CPI Highest Since Chinese New Year

     BEIJING (MNI) - Growth of China's consumer price index (CPI) and producer

price index (PPI) beat estimates in August, indicating increased inflation

pressure in the country, according to data released by the National Bureau of

Statistics on Monday. MNI highlights five things worth particular attention:

     - CPI grew 2.3% y/y, the fastest growth since February, when the Chinese

New Year boosted widespread price growth of 2.9%. The August CPI growth was

higher than the 2.2% median forecast in an MNI survey, up from the 2.1% gain in

July. Core CPI, excluding food and energy prices, climbed 2.0%, 0.1 percentage

point higher than July. From January to August, consumer inflation growth was

2.0%, same as that in the first seven months.

     - The accelerated y/y CPI growth was buoyed by gains in both food and

non-food prices. Prices of eggs, vegetables and fruits increased 10.3%, 4.3% and

5.5% y/y due to extreme weather conditions and lower supply. Meat prices also

rose, with pork prices dropping 4.9% -- but the slowing decline of pork prices

helped keep CPI growth high, according to the NBS. Gasoline price growth of

19.8% and diesel price gain of 22.0% also drove up CPI growth in August.

     - On a monthly basis, CPI increased 0.7% in August -- again its highest

increase since February's 1.2%. The August m/m gain was higher than 0.3% in

July. This was mainly due to strong food price growth at 2.4%, much higher than

the 0.1% gain in July. Vegetable prices rose 9% m/m due to extreme weather

conditions, and pork prices increased 6.5% from less supply and the swine flu.

Non-food prices also saw robust growth, especially flight tickets and hotel

prices, both up 1.8% and 1.2% respectively due to schools' holiday season.

     - PPI rose 4.1% y/y in August, higher than the 4.0% median forecast in a

MNI survey, while down from 4.6% in July. The y/y PPI growth in August was the

highest since December last year when the gain was 0.8%. Over the first eight

months, it increased 4.0%, same as its increase in the first seven months.

Factory-gate price growth of ferrous metal smelting and flattening fell by 2.8

percentage points, while crude oil and natural gas dropped 2.5 percentage

points, fossil fuel processing dropped 1.9 percentage points, and coal mining

and washing dropped 1.3 percentage point, which all contributed to the slower

y/y PPI growth.

     - On a monthly basis, PPI climbed 0.4% in August, faster than the 0.1%

recorded in July. It was buoyed by faster growth of ferrous metal smelting and

flattening, fossil fuel processing, as well as chemical raw materials and

products, according to the NBS.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Beijing Bureau; +86-10-8532-5998; email: beijing@marketnews.com

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