The Chinese consumer has been overlooked over and over this year despite rising inflation that eventually sustained factory profit and the local economy. The consumer activity has greatly shown that China is on a surge this year and promises an aggressive growth most especially on the country’s high-income status target.
Consumer prices, to be exact, have been reported to be surging this past few months and analysts are expecting it to fuel a bullish run on the country’s economy. The surge was unexpected as both CPI and PPI increased these past few months.
The actual results for the consumer prices for the last month were highly surprising with inflation rising over at a four-month high. According to most analysts, the surge was buoyed by great gains on their raw materials prices while simultaneously feeding off on the great factory profits. Consumer inflation, on the other hand, was also surging to seven-month high and trampling forecasts despite steady price gains over the last few months.
Commerzbank analyst noted that "We believe that the market has underestimated the inflationary pressure facing China's economy, although inflation is unlikely to surge in the foreseeable future. That said, onshore rates are still on the rise," when asked about the growing financial costs.
Looking at figures, the consumer prices were up by a total of 0.4% at a month-on-month timeline from last August according to the local National Bureau of Statistics and sitting at a 1.8% on a year-on-year term. This is a pretty hefty increase as most statisticians and analysts were only expecting a total of 1.7%, while the CPI or the Consumer Price Index for July was looking stale at a total of 1.4% on the same year-on-year period.
The National Bureau of Statistics also reported that the price for eggs has increased by a massive 16.2% while the price of the fresh vegetables has also increased by a whopping 8.5% due to the devastating hot weather in the country. According to the NBS, both eggs and fresh vegetables were the main culprits behind the CPI increase.
On the other, the factory gate prices were also surging last August tallying an increase of about 0.9% as opposed to the figures that were reported last July; while the increase on a year-on-year period was up by 6.3% and increasing by a respectable 5.5% against the prior month.
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