Summary The diverging figures underline the task facing China's leaders.
BEIJING (AFP) - China s consumer inflation jumped to 2.0 percent in August, driven by the rising cost of pork, but factory gate prices fell at their fastest in nearly six years, in a mixed picture for the world s second-largest economy.
The diverging figures underline the task facing China s leaders as fears of a growth slowdown have rocked global financial markets in recent weeks.
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 expansion.
The reading for the consumer price index (CPI), a main gauge of inflation released by the National Bureau of Statistics (NBI), was higher than July s 1.6 percent and the strongest since a similar 2.0 percent in August last year.
In August, food prices were again the key factor for inflation, NBS analyst Yu Qiumei said in a statement.
Prices of pork and vegetables soared 19.6 percent and 15.9 percent respectively, contributing to more than half the CPI increase, Yu said.
But 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 percent in August, the worst since a 7.0 percent fall in September 2009.
It was steeper than a 5.4 percent retreat in July and marked the 42nd consecutive monthly drop -- illustrating oversupply from China s factories.
New growth policies
Slowing economic growth and declines in commodity prices have helped keep China s consumer inflation in check, with some economists even voicing concerns about possible deflation.
CPI touched 0.8 percent in January -- its lowest in more than five years. The latest reading compared with the median estimate of 1.8 percent in a survey of economists by Bloomberg News.
"Looking ahead, we expect both measures of inflation to rebound over the coming quarters," Julian Evans-Pritchard, China economist at Capital Economics, said in a note.
He added that steep falls in pig numbers will keep food prices high while declines in global commodity prices mean both inflation measures should strengthen due to a weaker base of comparison "which ought to help assuage any lingering concerns over deflation".
Growth in China s gross domestic product (GDP) hit a 24-year low last year, expanding 7.3 percent amid a steady slowdown from years of double-digit expansions. GDP has slowed further this year, expanding 7.0 percent in each of the first two quarters.
Premier Li Keqiang said on Wednesday that the government is capable of maintaining high economic growth, trying to stem fears about slowing economic growth that have sent global financial markets on a rollercoaster ride recently.
Li s comments came after China it will adopt "stronger" fiscal policies to support growth.
The inflation survey collects prices from more than 63,000 outlets including grocery stores, supermarkets, shopping malls and agricultural trade markets across 500 cities and counties in the country, according to the NBS.
