Deflation risks prompt more stimulus measures

BEIJING - Consumer prices in China hit the highest level this year while deflation risks in industrial production loomed larger, signaling a need for continued easing policies.

The National Bureau of Statistics (NBS) announced on Thursday that China's consumer price index (CPI), the main gauge of inflation, climbed to 2 percent in August, the highest level in 2015.

The figure was up from a predicted 1.9 percent and the 1.6 percent recorded in July. On a monthly basis, the CPI rose 0.5 percent in August, according to the NBS.

NBS statistician Yu Qiumei attributed the pick-up to higher food prices, including vegetables and pork.

The price of China's favorite meat is one of the most important factors the NBS considers when formulating the CPI. Pork prices climbed sharply by 19.6 percent year on year in August.

Since 2015, pork prices have risen as a result of a decline in pig breeding. Low prices last year and rising feed prices have left farmers less willing to raise pigs.

Pork prices surged more than 20 percent between March 20 and July 17 this year, according to data provided by the Ministry of Commerce.

Non-food inflation remained subdued at 1.1 percent in August, unchanged from July.

Zhu Baoliang, an economist with the State Information Center, a government think tank, said favorable factors remain to keep inflation under control, including an expanding service industry and a government determined to deliver on its reform promises.

He predicted the inflation rate in the second half of the year will not exceed 2 percent. The Chinese government aims to keep consumer inflation at around 3 percent for 2015.

The producer price index (PPI), a measure of costs for goods at the factory gate, fell 5.9 percent year on year in August, widening from the 5.4-percent drop seen a month earlier, NBS data showed.

The August reading slumped to its lowest level since the end of 2009, marking a 42nd straight month of decline.