11th Sep 2023 12:13
(Alliance News) - There was some good news from China over the weekend, as consumer prices in the country returned to positive territory, even if just slightly.
The consumer price index was 0.1% higher annually in August, compared to a 0.3% deflation in July. This underperformed against FXStreet-cited expectations, which anticipated a 0.2% increase.
Month-on-month, consumer prices were 0.3% higher in August, accelerating from a 0.2% rise in July and in line with expectations.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, warned that the numbers "remain alarmingly low."
Meanwhile, Tim Waterer, chief market analyst at KCM Trade, said it was "evident" that the Chinese authorities "still have plenty on their plate to deal with in terms of trying to arrest the economic slide."
However, other analysts viewed the return to inflation as a positive, following months of concerns about China's post-Covid recovery. Notably, the country has been dealing with weaker domestic spending and a fall in exports in recent months.
Susannah Streeter, head of money & markets at Hargreaves Lansdown, said the data may show that "China's economic troubles could be dissipating."
In response to the reading, London's mining stocks, which are exposed to China, boosted the FTSE 100 index on Monday.
"The reading, which emerged over the weekend, implies an improvement in the commodities demand picture and in turn provides a boost to the resources sector," AJ Bell's Russ Mould said.
At about midday Monday, Fresnillo, Anglo American, Rio Tinto and Glencore were up 6.9%, 2.9%, 2.5% and 2.1%, respectively.
Asia-focused bank Standard Chartered was up 0.9%. Insurer Prudential, which is also Asia-focused, rose 1.0%.
By Sophie Rose, Alliance News reporter
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