China's manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signalling stubborn deflation risks in the economy and adding to expectations for further stimulus measures.
The producer price index (PPI) fell 5.9% in August from the same period last year, its 42nd consecutive month of decline and the biggest drop since the depths of the global financial crisis in late 2009, data showed yesterday.
The market had expected a decline of 5.5% after a drop of 5.4% in July.
"The change in PPI is very worrying. It could affect corporate profitability, which in turn could affect consumption and the economy," said Li Huiyong, economist at Shenyin & Wanguo Securities. "We must step up policy support."
Economists believe that China's surprise currency devaluation of nearly 2% in mid-August will have little impact on inflation in the near term, in comparison with the effect of sharply lower commodity prices.
China's manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signalling stubborn deflation risks in the economy and adding to expectations for further stimulus measures.The producer price index (PPI) fell 5.9% in August from the same period last year, its 42nd consecutive month of decline and the biggest drop since the depths of the global financial crisis in late 2009, data showed yesterday.The market had expected a decline of 5.5% after a drop of 5.4% in July."The change in PPI is very worrying. It could affect corporate profitability, which in turn could affect consumption and the economy," said Li Huiyong, economist at Shenyin & Wanguo Securities. "We must step up policy support."Economists believe that China's surprise currency devaluation of nearly 2% in mid-August will have little impact on inflation in the near term, in comparison with the effect of sharply lower commodity prices.
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