Data released by the National Bureau of Statistics on September 9 shows that in August, the national Consumer Price Index (CPI) rose 0.8% year-on-year and 0.4% month-on-month, while the core CPI, which excludes food and energy prices, increased 1.0% year-on-year. What insights can be drawn from the latest price figures?

Notably, both the CPI and core CPI year-on-year increases rebounded in August, with the CPI year-on-year gain ending a two-month decline to reach 0.8%. According to Dong Lijuan, Chief Statistician at the NBS Urban Department, the expansion of the CPI year-on-year increase by 0.3 percentage points from the previous month was mainly driven by a broader rise in energy prices, which accelerated from 0.6% in July to 4.1% in August, contributing approximately 0.28 percentage points to the CPI year-on-year change.

The month-on-month trend also signaled a turnaround. In August, the CPI shifted from a decline to an increase, moving from a 0.1% drop in July to a 0.4% rise. Dong explained that domestic gasoline prices, influenced by international market fluctuations, turned from a 10.7% decline to a 7.2% increase month-on-month, contributing about 0.21 percentage points to the monthly CPI change. Seasonal food price gains also played a key role, with fresh vegetable prices up 5.5% due to hot, rainy weather and seasonal crop transitions, egg prices rising 2.4% after a 2.1% decline as laying hens entered summer molt and hog slaughter decreased, and pork prices climbing 1.3%—together adding roughly 0.12 percentage points to the monthly CPI increase.

Xu Guangjian, Vice President of the China Price Association, noted that food and energy prices are heavily influenced by short-term factors, emphasizing that observing price trends requires attention to the core CPI, which excludes these volatile items. In August, the core CPI year-on-year increase remained stable around 1%, with notable gains in some industrial consumer goods and services prices, reflecting the impact of upgraded and expanded consumer demand on inflation. He also cautioned against over-reliance on single-month data, pointing to the first eight months of the year, where the CPI rose 0.9% and core CPI 1.1% year-on-year—both significantly higher than the same period last year and for the full year of the previous year. Despite occasional disruptions from international factors in certain sectors, the trend of moderate consumer price increases remains unchanged.

Of particular interest, driven by combined international and domestic factors, the Producer Price Index (PPI) in August turned from a 0.7% decline to a 0.4% increase month-on-month, and rose 3.8% year-on-year, marking the sixth consecutive month of annual increases since March when it emerged from a downturn. The PPI shift was partly attributed to upward transmission from international commodity price hikes. Dong noted that rising international crude oil and non-ferrous metal prices in August drove up prices in related domestic industries, with extraction of petroleum, refined petroleum product manufacturing, and organic chemical raw material manufacturing prices rising 10.4%, 4.1%, and 0.9% month-on-month, respectively. Additionally, industrial transformation and upgrading boosted demand and prices in certain sectors, as evidenced by electronic circuit manufacturing prices up 3.5%, virtual reality equipment manufacturing prices up 1.9%, and biomass fuel processing and comprehensive utilization of waste resources each rising 0.3% month-on-month.

Xu analyzed that in August, both producer ex-factory prices and purchasing prices continued the trend of year-on-year increases that began in March, a positive shift signaling improved supply-demand dynamics in some industries, supported by domestic industrial upgrading and efforts to address "involution" competition, which could bolster business confidence. However, he cautioned that purchasing price increases have outpaced ex-factory gains in recent months, suggesting relatively pronounced upstream raw material cost pressures. This warrants close attention to potential operating strains on midstream and downstream enterprises, advocating for measures such as stabilizing supply chains and optimizing capacity layout to mitigate price volatility.

Liu Fang, a researcher at the National Development and Reform Commission's Market and Price Research Institute, believes that overall, supportive factors for moderate price increases are steadily accumulating, given the full utilization of existing policy effects, timely introduction of pragmatic incremental policies, and intensified counter-cyclical adjustments. As macro policies take effect, improvements in employment and income expectations could accelerate the release of domestic demand potential, while new growth drivers in areas like artificial intelligence continue to support strong prices for related products. Meanwhile, the deepening construction of a unified national market should further smooth price transmission channels. Liu expects the near-term price trajectory to maintain a favorable pattern of moderate CPI gains and stabilizing PPI increases.