Consumer prices in China increased 2.0% in August from a year earlier. Purchaser prices declined -6.6% over the same period. The divergent trends in China’s structure of production that began at the beginning of 2015 accelerated in August. Two additional surprises came out of August’s numbers. First, although the Consumer Price Index is at the highest point it has been at in a year, because of the devaluation against the U.S. dollar in August, consumer prices have dropped for overseas Chinese. Additionally, although the devaluation should have hit producer prices harder than consumer prices, the drop in producer prices was the largest since the Global Financial Crisis. The devaluation itself spooked commodity markets into lower territory.
