China's annual consumer inflation rate rose 2.6 percent in August, official data showed on Monday, in line with market expectations and with little change from the previous month's 2.7 percent rise.
The National Bureau of Statistics also said that China's producer prices fell 1.6 percent last month from a year earlier, compared with a fall of 2.3 percent in the previous month.
Exports increased more than estimated during the same period and with inflation staying below a government target, Premier Li Keqiang is hoping to sustain a rebound in the world’s second-largest economy from a two-quarter slowdown.
Overseas shipments rose 7.2 percent from a year earlier exceeding the 5.5 percent median estimate and consumer prices rose 2.6 percent, leaving room for extra stimulus if needed.
China’s economy is picking up after Premier Li announced support measures such as tax cuts for small businesses and extra spending on railways. The producer-price index fell by the least in six months while exports to the U.S. and European Union grew for a second month, underscoring improvements in demand inside and outside China.
China shares extended gains after the positive data which added to optimism following solid trade data over the weekend. The CSI300 of the leading Shanghai and Shenzhen A-share listings was up 2.1 percent at 2,408.1 points. The Shanghai Composite Index gained 1.9 percent. Both are now at their highest intra-day levels since mid-August.
The government is seeking to keep consumer-price gains within 3.5 percent this year, Li wrote in an opinion article today in the Financial Times. This level is in line with an “upper limit” of economic performance meant to prevent inflation.
Li said that the economy “will maintain its sustained and healthy growth,” with expansion around a 7.5 percent “lower limit” intended to ensure steady growth and employment. Commerce Minister Gao Hucheng said he’s confident the nation will meet its 8 percent target for trade gains for the year, according to a report yesterday on China National Radio.