Chinese consumer, factory gate prices accelerate in August

Inflation in China rose past forecasts last month at both the retail level and factory gate level.

Consumer prices were up by 0.3% month-on-month in August, according to the National Bureau of Statistics, and by 1.8% year-on-year.

That was a quicker rate of advance than the 1.7% rate of advance which economists had penciled in.

In July, headline CPI had increased at a 1.4% clip on the year.

According to NBS, sharp increases in the price of eggs (16.2%) and fresh vegetables (8.5%) - on the back of hot weather - were the main culprits behind the rise in CPI. As a category, food prices were 1.2% higher than in July and non-food prices by 0.2%.

Meanwhile, factory gate prices were 0.9% higher versus July, accelerating to a 6.3% pace year-on-year after a rise of 5.5% in the month before.

The consensus forecast had been for an increase of 5.7%.

Commenting on Saturday's figures, Allan von Mehren at Danske Bank said gains should be short-lived.

Concerning the latest CPI numbers, inflation was rising from a low level and would push up on headline readings in coming quarters. Nevertheless, inflation was still not high enough to trigger any move on the lending rate, he said, adding that authorities' 'crack-down' on shadow banking and measures to cool housing should do the work.

Regarding factory gate prices, August's advance was a reflection of the rebound in commodity prices and was set to be "temporary" given how the economy was set to slow over the next 12 months.

"Re-acceleration should prove temporary as policy tightening will work its’ way through on the other side of the 19th National Congress starting 18 October."