Consumer prices in China rose last month by more than expected, primarily due to seasonal factors such as bad weather, raising concerns about a slowdown in domestic demand and reinforcing the need for more support policies.

The National Bureau of Statistics of China reported that the consumer price index increased last month by an annual rate of 0.5%, surpassing Bloomberg News's estimate of 0.3%.

Excluding energy prices and volatile goods like food items, the core consumer price index rose by 0.4%, the lowest rate since January, indicating a general decline in demand.

Bloomberg quoted Serena Cho, chief China strategist at Mizuho Securities Asia Ltd., as saying: "Adverse weather conditions and the low base of last year's pork prices were the main factors for rising inflation, rather than an increase in domestic demand."

She added: "We expect coordinated monetary and fiscal support in the second half of 2024."

For her part, Dong Liquan, chief statistical expert at the Chinese statistical office, attributed the rise in the consumer price index to the "continued recovery of consumer demand," but noted that rising temperatures and rainfall in some areas had an impact on prices.

Liquan explained in statements to Bloomberg that adverse weather led to an increase in vegetable and egg prices during July, which compensated for losses from the previous month. She mentioned that the largest increase in pork prices since 2022, due to the low base prices from last year, also contributed to the rise in inflation.