China reported weaker-than-expected consumer price growth for August, signalling continued sluggish domestic consumer demand. This could place further pressure on key sectors in European stock markets, including luxury consumer and mining stocks, which are sensitive to China’s conomic data.
China’s consumer prices rose by 0.6% year-on-year in August, falling short of the expected 0.7% but showing a slight improvement from the 0.5% rise in July.
However, factory gate prices, as measured by the Producer Price Index (PPI), remained in deflation, dropping by 1.8% compared to a year ago, exceeding the estimated 1.5% decline and following a 0.8% decrease in July.
The data indicates that China’s economic recovery continues to falter, largely due to the downturn in the housing market and the lingering effects of prolonged Covid-related restrictions.