China’s CPI shifted from flat to a decline in August, primarily due to a high base effect from last year and weaker food prices this month. Food prices fell 4.3% year-on-year, with the decline widening by 2.7 pp from the previous month. This exerted an additional downward pull of about 0.51 pp on CPI year-on-year, exceeding the overall decline in CPI. Pork and fresh vegetable prices dropped 16.1% and 15.2% year-on-year, respectively, becoming the main drags. Meanwhile, core CPI maintained its upward momentum, rising 0.9% year-on-year in August, marking the fourth consecutive month of expansion, supported by the continued effectiveness of policies to boost domestic demand and consumption.
On a month-on-month basis, food prices rose 0.5% in August, but the increase was about 1.1 pp below the seasonal norm. By category, pork, eggs, and fresh fruit all recorded weaker-than-seasonal price gains, limiting the overall upward contribution of food prices to CPI.