China's factory, consumer inflation pick up

China's factory, consumer inflation pick up

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China's factory prices climbed for a 12th month as domestic demand remained resilient and the government continued to reduce excess industrial capacity. Consumer prices accelerated. The producer price index rose 6.3% in August from a year earlier, versus an estimated 5.7% in a Bloomberg survey and a 5.5% July reading. PPI exceeded all but one of 38 estimates in Bloomberg's survey of economists. The consumer price index climbed 1.8%, compared with 1.4% a month earlier, the statistics bureau said Saturday. "China's reflation story remains intact," Tom Orlik, chief Asia economist at Bloomberg Intelligence in Beijing, wrote in a report. "The reflation of the factory sector is a significant positive for China's economy – driving profits higher and enabling corporates to process their debt burden a little more easily. The caveat is that reflation reflects more stimulus-boosted demand, and positive market sentiment, than it does efforts to close down excess supply – and is therefore subject to reversal."