Data released by the National Bureau of Statistics on September 9 shows that both the Consumer Price Index (CPI) and Producer Price Index (PPI) reversed their previous month-on-month declines in August, turning positive simultaneously and expanding their year-on-year gains. This reflects an overall trend of moderate recovery.

Specifically, CPI rose 0.4% month-on-month, reversing the 0.1% decline in July, while its year-on-year growth climbed back to 0.8%. Core CPI, excluding food and energy prices, saw its year-on-year increase edge up to 1.0%. Meanwhile, PPI gained 0.4% month-on-month, snapping a 0.7% fall in the prior month, with its year-on-year expansion widening to 3.8%.

According to Dong Lijuan, chief statistician at the Urban Department of the National Bureau of Statistics, this shift stems not only from conventional factors such as international commodity price pass-through and seasonal food fluctuations, but also highlights the role of domestic industrial upgrading in driving demand growth in certain sectors.

Energy prices emerged as the primary driver behind the broader CPI year-on-year gain. Dong noted that energy price growth accelerated from 0.6% to 4.1%, with gasoline prices surging 9.3% year-on-year, an expansion of 8.3 percentage points. Beyond energy, service prices also contributed to the CPI rebound. Feng Lin, executive director of the research and development department at Golden Credit Rating, told reporters that service prices climbed 0.8% year-on-year in August, with the pace widening from the prior month. This was the main factor pushing core CPI growth up by 0.1 percentage point to 1.0%.

Food price movements remained stable. August data reveal that the combined effect of policy measures governing pig production capacity, coupled with frequent extreme weather events like high temperatures and heavy rainfall in some regions that pushed up transportation costs, led to a modest month-on-month increase in pork prices. Year-on-year, pork prices fell 11.8%, a narrowing of 1.5 percentage points from the previous month. Egg prices, meanwhile, jumped 18.5% year-on-year, expanding by 0.7 percentage point, largely due to reduced laying hen output during the summer heat period. Feng Lin stated that these factors offset the impact of a wider year-on-year decline in vegetable prices, keeping food prices' influence on CPI steady.

PPI's year-on-year growth re-accelerated in August after a brief slowdown in the prior month, rising 3.8%. Month-on-month, it swung from a decline to a gain. Dong attributed the monthly PPI movement to imported cost pressures, demand increases in certain industries driven by industrial upgrading, and seasonal price rebounds in some sectors.

Higher international crude oil and non-ferrous metal prices pushed up prices in related domestic industries. Specifically, prices in petroleum extraction, refined petroleum product manufacturing, and organic chemical raw material manufacturing rose 10.4%, 4.1%, and 0.9%, respectively. Non-ferrous metal smelting and rolling processing saw a 0.8% price increase. Collectively, these four sectors contributed approximately 0.31 percentage points to the monthly PPI gain.

At the same time, the "smart" and "green" content of industrial development continues to rise. Data show that electronic circuit manufacturing prices increased 3.5%, virtual reality device manufacturing prices rose 1.9%, and service consumer robot manufacturing prices gained 0.3%. Prices in biomass fuel processing and comprehensive utilization of waste resources both increased 0.3%.

Pang Ming, a member of the China Chief Economist Forum, commented that a moderate rise in CPI is conducive to stabilizing people's livelihoods, while PPI recovery improves corporate profitability. However, structural divergences warrant close attention. Going forward, policy should continue to focus on smoothing the economic cycle, boosting income and profit expectations of microeconomic entities, expanding service consumption potential, stabilizing food prices, and consolidating the sustainability of industrial profit improvements.

Looking ahead to September, Feng Lin predicts that CPI's year-on-year growth is likely to return to around 1.0%. This outlook is underpinned by high international oil prices in early September, continued upward momentum in electronics prices during the month, and a seasonal uptick in food prices that will likely narrow their year-on-year decline. For macroeconomic policy, this implies greater room for consumption-boosting measures, and crucially, price factors will not constitute a major constraint on central bank rate cuts.

Several market institutions anticipate that PPI may test its yearly high again in the coming months. Feng Lin believes that international imported factors will continue to drive domestic PPI upward in September, while the impact of extreme weather on construction activity is expected to diminish. Combined with the effect of growth-stabilizing policies, price declines in domestic steel, building materials, and other industrial products are likely to moderate. Consequently, September PPI is expected to post a modest month-on-month increase, with year-on-year growth accelerating further to around 4.0%.