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China producer prices post strongest fall in 3 years

China producer prices post strongest fall in 3 years

The Chinese producer price index (PPI) reported its strongest fall in three years, adding to concerns the world’s second-biggest economy is headed into economic slowdown.

China’s factory prices fell by 0.8 percent in August from a year ago, compared with a 0.9 percent decline estimated by analysts. In July, prices plunged 0.3 percent.  

On the other hand, the consumer price index rose 2.8 percent on an annual basis in August, faster than the median estimates 2.7 percent, marking the highest rate in 36 months, according to the National Bureau of Statistics report released on Tuesday. 


The deflation in factory prices is hurting the pricing capacity of manufacturers and threatening to lower inflation from the rest of the world economy through exports. 

The People’s Bank of China announced new easing measures last week, encompassing cuts in reserves that banks hold, but economists say more stimulus is needed to bolster demand. 

The Chinese central bank set the exchange rate of the yuan against the U.S. dollar at 7.0846 on Tuesday, compared to 7.0851 per dollar on Monday.

As of 09:50 GMT, the onshore yuan was 0.22 percent up at 7.1051 per dollar, while the offshore yuan traded 0.21 percent higher at 7.1035.

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