Based on the latest figures released by the statistics bureau on the 9th, the Consumer Price Index (CPI) transitioned from a 0.1% month-on-month decline in July to a 0.4% increase in August, influenced by shifts in international market prices and seasonal rises in food costs. This shift brought the year-on-year CPI growth rate back up to 0.8%, according to Dong Lijuan, chief statistician at the department.

The core CPI, which excludes food and energy prices, also saw its annual growth rate recover to 1.0%. Concurrently, the Producer Price Index (PPI) also flipped from a 0.7% decrease in the previous month to a 0.4% increase. This was driven by upward transmission from international commodity prices and increased demand in certain sectors due to industrial upgrades, causing the year-on-year PPI growth to expand to 3.8%.

CPI Shifts from Decline to Growth, Shows Mild Annual Recovery

On a monthly basis, the national CPI reversed its trend, moving from a 0.1% decline to a 0.4% increase. Reflecting changes in international markets, domestic gasoline prices swung from an 10.7% drop to a 7.2% rise, contributing approximately 0.21 percentage points to the monthly CPI increase. Similarly, gold jewelry prices turned around from a 2.6% fall to a 7.6% gain, adding about 0.04 percentage points.

Driven by the rapid growth in computing power demand, prices for mobile phones, tablets, and data storage equipment increased by 2.3%, 2.1%, and 2.1%, respectively, collectively pushing the CPI up by roughly 0.03 percentage points. Food prices, which were flat in the previous month, rose by 0.4%, contributing around 0.07 percentage points to the monthly uptick. Within the food category, fresh vegetable prices surged 5.5% due to hot, rainy weather and seasonal replanting, with the growth rate expanding by 4.2 percentage points from July. Egg prices rebounded from a 2.1% decrease to a 2.4% increase, influenced by hens resting during the hot summer months and reduced hog slaughter, while pork prices climbed 1.3%. These three items together accounted for about 0.12 percentage points of the monthly CPI growth.

Conversely, ample supply of seasonal fruits led to a 2.5% price drop for fresh fruits, and the end of fishing moratoriums in some sea areas increased supply, pulling down aquatic product prices by 0.9%. These two factors collectively contributed a negative 0.07 percentage points to the monthly CPI. Service prices inched up by 0.1%, with the growth rate slowing by 0.3 percentage points from the previous month, contributing 0.04 percentage points. During the summer vacation, travel-related service prices continued to climb, with transport vehicle rental, airfares, and hotel accommodation costs rising by 3.3%, 3.0%, and 1.0%, respectively.

From an annual perspective, the national CPI rose 0.8%, a 0.3 percentage point acceleration from July, mainly attributed to a larger increase in energy prices. The annual growth in energy prices expanded from 0.6% to 4.1%, contributing about 0.28 percentage points to the CPI's year-on-year growth, an increase of 0.24 percentage points from the previous month. Specifically, gasoline prices rose 9.3%, with the growth rate widening by 8.3 percentage points. Industrial consumer goods excluding energy saw their prices increase by 1.8%, with the growth rate expanding by 0.3 percentage points, contributing roughly 0.42 percentage points to the annual CPI. Notably, gold jewelry prices jumped 33.6%, accelerating by 9.0 percentage points, while tablets, computers, and mobile phones saw price increases of 21.5%, 19.6%, and 11.0%, respectively, all with widening growth rates.

Service prices rose by 0.8% year-on-year, with the increase rate expanding by 0.1 percentage points, contributing 0.38 percentage points. Travel service prices increased by 1.3%, accelerating by 1.2 percentage points, although medical service price growth slowed by 0.3 percentage points to 4.0%. Food prices declined by 1.4% annually, with the contraction narrowing by 0.1 percentage points, contributing a negative 0.24 percentage points to the CPI. Pork prices fell 11.8%, with the decline narrowing by 1.5 percentage points, impacting the annual CPI by -0.22 percentage points. Prices for fresh vegetables, fruits, grains, edible oils, aquatic products, and dairy fell between 0.5% and 2.8%, collectively contributing -0.10 percentage points. Conversely, egg prices surged 18.5% (growth expanding by 0.7 percentage points), and prices for mutton, beef, and poultry rose between 1.1% and 6.3%, together adding 0.07 percentage points to the annual CPI.

PPI Turns Positive on a Monthly Basis, Annual Growth Accelerates

The national PPI also shifted from a 0.7% monthly decline to a 0.4% increase. Key characteristics of the monthly PPI movement include import-driven price increases: international crude oil and non-ferrous metal price rises boosted domestic industries, with prices for oil extraction, refined petroleum product manufacturing, and organic chemical raw material manufacturing up 10.4%, 4.1%, and 0.9%, respectively. The non-ferrous metal smelting and rolling industry saw a 0.8% increase. These four sectors combined contributed about 0.31 percentage points to the monthly PPI growth.

Further, industrial transformation and upgrades spurred demand and price increases in certain sectors. As new growth drivers are cultivated, prices rose for electronic circuit manufacturing (3.5%), virtual reality device manufacturing (1.9%), and service consumer robot manufacturing (0.3%). Prices for biomass fuel processing and comprehensive waste resource utilization both rose by 0.3%. Seasonality also played a role: increased electricity and coal demand in August drove up prices for coal mining and washing by 2.8% and electricity supply by 1.4%. Conversely, hot, rainy weather hampered construction activity, leading to a 0.9% drop in ferrous metal smelting and rolling prices and a 0.2% decline in non-metallic mineral products.

On a year-on-year basis, the national PPI rose 3.8%, with its growth rate expanding by 0.3 percentage points from last month. Among major industries with price increases, coal mining and washing led with a 26.6% surge, followed by non-ferrous metal smelting and rolling at 20.8%. Oil and natural gas extraction, oil/coal processing, and chemical raw material manufacturing saw increases of 10.5%, 11.1%, and 9.1%, respectively. Electrical machinery manufacturing rose 5.9%, and computer, communication, and other electronic equipment manufacturing increased 5.3%. These seven sectors together contributed approximately 4.24 percentage points to the annual PPI increase, adding 0.37 percentage points more than in July. The six industries with the largest downward pull on prices included electricity and heat production, automobile manufacturing, non-metallic mineral products, pharmaceutical manufacturing, and food processing, with declines ranging from 1.7% to 5.3%, collectively dragging the annual PPI down by about 0.74 percentage points.