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Chinese inflation falls to 1.8%

Nick Paler
Written By:
Nick Paler
Posted:
Updated:
09/08/2012

China’s inflation level fell to a 30-month low of 1.8% in July, continuing to tumble as the global slowdown takes hold.

The fall in July follows a 2.2% inflation rate in June, which in turn was sharply lower than the 3% recorded in May.

The main driver of the fall was a slide in food prices, which have dropped sharply.

While Chinese data is often questioned for its accuracy, the trend forming is clear, and China has moved to boost consumption internally to combat the slowdown.

China’s central bank, the People’s Bank of China, has cut its key interest rates twice since the start of June. That has taken the benchmark lending rate down to 6%

The fall in inflation coincides with a slowdown in China’s economy, which grew at its slowest pace in three years in the second quarter.

China’s economy grew at an annual rate of 7.6% in Q2, down from 8.1% in Q1.