China reported weaker-than-expected consumer price growth for August, signalling continued sluggish domestic consumer demand. This could place further pressure on key sectors in European stock markets, including luxury consumer and mining stocks, which are sensitive to China's conomic data. China's consumer prices rose by 0.
6% year-on-year in August, falling short of the expected 0.7% but showing a slight improvement from the 0.5% rise in July.
However, factory gate prices, as measured by the Producer Price Index (PPI), remained in deflation, dropping by 1.8% compared to a year ago, exceeding the estimated 1.5% decline and following a 0.
8% decrease in July. The data indicates that China's economic recovery continues to falter, largely due to the downturn in the housing market and the lingering effects of prolonged Covid-related restrictions. China's Gross Domestic Product (GDP) grew by 4.
7% in the second quarter at an annualised rate, weaker than the forecasted 5.1% and down from 5.3% in the first quarter.
A week ago, China also reported a weaker-than-expected Manufacturing Purchasing Manager Index (PMI), which has contracted for the fourth consecutive month. These figures put China's 5% growth target for 2024 under increasing pressure, prompting several institutions to downgrade their forecasts. UBS now expects the country's economy to grow by 4.
6% this year and 4% in 2025, compared with previous projections of 4.9% and 4.6%, respectively.
China's sluggish consumer demand ha.