China's pork prices, which has been rising for three months straight, led China's consumer price index (CPI) to grow 2.0 percent in August from a year ago, up 0.35 percentage point from July, and higher than average market expectation of 1.9 percent.
Though the upward momentum of pork prices may continue into the fourth quarter of 2015 or even the next half of 2016, that will not cause serious inflation in China, Gao Shanwen, chief economist at Essence Securities says in a research report Friday.
Gao attributes the increases of pork prices mainly to industry supply-demand, saying the demand side of the whole economy is still weak and pork price rise is unlikely to cause serious inflation. Regarding the low base of the second half of 2014, China's CPI is expected to mildly go up, but inflation pressure is still limited which would not affect the country's current monetary easing measures, Gao says.
Gao believes the country's producer price index (PPI) fell 5.9 percent on a yearly basis in August, and the declinea fall is moderately larger than expected.
He says China's purchasing managers' index and foreign trade data still continue the downward trend and whether if construction of infrastructure projects and the real economy would pick up still needs further observation.
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