China August inflation drops to 2.0% on-year

Chinese consumer prices rose 2.0 percent in August on-year, official data showed Thursday, inflation in the world's second-largest economy slipping to a four-month low and remaining well below the government's annual target.
China's consumer price index (CPI) -- a main gauge of inflation -- also rose by 2.2 percent in the first eight months of the year from the same period in 2013, the National Bureau of Statistics said in a statement.
The result for August compared with an increase of 2.3 percent in July and was also lower than the median estimate of 2.2 percent in a survey of 15 economists by the Wall Street Journal.
The figures fall well short of the 3.5 percent annual inflation target set by the government in March.
Moderate inflation can be a boon to consumption as it encourages consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can weigh on growth.
The stable inflation figures came as worries have increased over the strength of China's economic outlook, with the effects of steps taken earlier this year to prop up slowing growth waning and worries intensifying over the potential for a bust in the country's property sector to upset the government’s forecasts.
Authorities have since April introduced measures to boost the economy by giving tax breaks to small enterprises, targeted infrastructure outlays and incentives to encourage lending in rural areas and to small companies.
The government on Monday announced that China's trade surplus surged to a record $49.8 billion in August as imports surprisingly fell and export growth slowed.
The data came on the heels of other figures, including manufacturing activity surveys, showing continued weakness in the economy and spurring further expectations among economists that authorities will unveil new measures to boost growth.
China's GDP accelerated to a higher-than-expected 7.5 percent in the second quarter from 7.4 percent during the first three months of the year, which was the worst since a similar 7.4 percent expansion in July-September 2012.
The government in March set its annual GDP growth target for 2014 at about 7.5 percent, the same as last year.
Overall food prices drove inflation, according to the NBS data, rising 3.0 percent from August last year, with double-digit increases in costs for fresh fruit and eggs.
Also Thursday, China's producer price index (PPI) -- a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI -- worsened to a decline of 1.2 percent in August, the NBS said in a separate statement.
The result compared with a decrease of 0.9 percent in July. The last PPI increase was in January 2012, when it rose 0.7 percent.