China's Consumer Prices Quicken in August, PPI Stuck in Deflation

BEIJING, Sept 9 (Reuters) - China's consumer prices accelerated in August to the fastest pace in half a year due to the higher costs of food from weather disruptions, while producer price deflation worsened, as Beijing maintained efforts to reinvigorate domestic demand.

A sputtering start in the second half is mounting pressure on the world's second-largest economy to roll out more policies amid a prolonged housing downturn, persistent joblessness, debt woes and rising trade tensions.

The consumer price index (CPI) rose 0.6% from a year earlier last month, versus a 0.5% rise in July, data from the National Bureau of Statistics (NBS) showed on Monday, but less than a 0.7% increase forecast in a Reuters poll of economists.

Extreme weather this summer from deadly floods to scorching heat has pushed up farm produce prices, contributing to faster inflation.

"Higher CPI in August was due to high temperatures and rainy weather," NBS statistician Dong Lijuan said in a statement.

Food prices jumped 2.8% on year in August from an unchanged outcome in July, while non-food inflation was 0.2%, easing from 0.7% in July.

Core inflation, excluding volatile food and fuel prices, was 0.3% in August, down from 0.4% in July.

The consumer inflation gauge was up 0.4% month-on-month, compared with a 0.5% increase in July and missing economists' expectations of a 0.5% gain.

In unusually strong comments, China's ex-central bank governor Yi Gang urged efforts to fight deflationary pressure at the Bund Summit in Shanghai last week.

A national campaign to earmark $41 billion in ultra-long treasury bonds to support equipment upgrades and trade-in of consumer goods has proven lukewarm in spurring consumer confidence, with domestic car sales extending declines for a fourth month in July.

Faltering economic activity has prompted global brokerages to scale back their China 2024 growth forecasts to below the official target of around 5%.

China has room to lower the amount of cash banks must set aside as reserves, a central bank official said on Thursday.

The producer price index (PPI) in August slid 1.8% from a year earlier, the largest fall in four months. That was worse than a 0.8% decline in July and below a forecast 1.4% fall.