China’s factory deflation eases, recovery gains momentum

July had seen China’s factory deflation slowing. This was mainly from an increase in global oil prices and as industrial activity reversed towards pre-pandemic levels, suggesting signs of rebound in the world’s second-largest economy.

China’s producer price index (PPI) dropped 2.4% from a year ago in July, the National Bureau of Statistics (NBS) said. The figure came milder than June’s record of a 3.0% decline. This also placed lower than the 2.5% drop predicted in a Reuters survey.

Moreover, the country’s consumer price index (CPI) advanced 2.7% from a year ago- the most rapid pace in more than three months.

Analysts believe that China is on its way to levels seen before the coronavirus pandemic ravaged the economy. This is likely as upbeat demand, fiscal stimulus, and strong exports increase the possibility of an economic recovery.