Moderate price increases show economy on right track

A moderate monthly increase in consumer and factory-gate prices in August indicated a stable economic rebound, economists said.

The Consumer Price Index climbed 0.5 percent in August month-on-month, which was mainly driven by rising food prices, especially for vegetables, pork and eggs, said Yu Qiumei, an economist at the National Bureau of Statistics.

Meanwhile, the Producer Price Index climbed 0.1 percent from July, an indicator that industrial production has improved after government measures to restructure the economy has started to take effect.

"A stable economic rebound is more obvious now," Yu said.

"China's economic data are better than expected recently, cooling off concerns about further slowdown in economic activity," said Chang Jian, an economist in China with Barclays Capital.

She expected that industrial production year-on-year growth will likely edge up slightly in August, as suggested by the expansion in the NBS and HSBC PMI indicators.

Zhu Haibin, the chief economist in China with JPMorgan, said that the recovery is driven by the shift in policy since July.

"In particular, policy guidelines have shifted from 'what not to do' to 'what to do', and investment is highlighted as an important part in stabilizing economic growth," he said.