China's Inflation Accelerated as Iran War Lifted Energy Prices to 6-Month Highs

Li Chen
09 Sep, 2026
Hong Kong

China's indexes lacked direction as investors reviewed the rising tensions in the Middle East and a slight pickup in inflation in August. 

The Hang Seng Index decreased 0.2%, the mainland-focused CSI 300 Index edged up 0.2%, and the Brent crude oil price jumped 1.5% to $99.56 a barrel. 

The renewed military exchanges between the U.S. and Iran lifted crude oil prices to six-month highs and strengthened the case for higher interest rates. 

China's annual consumer price inflation accelerated to 0.8% in August from a six-month low of 0.5% in the previous month, according to the National Bureau of Statistics. 

Higher transportation expenses supported the overall inflation, and non-food prices rose at a steeper rate of 1.2% compared to 0.9%, led by a sharp rise in transport costs by 2.5% from 0.4% in the previous month, respectively.  

Food prices decreased for the fifth month in August by 1.4% compared to 1.5% in the previous month, weighed down by a further drop in pork prices amid weak consumption and abundant supply. 

Core inflation, which excludes food and energy, advanced annually 1.0% from 0.9% in the previous month. 

On a monthly basis, consumer prices rose 0.4%, reversing a 0.1% decline in July.    

Producer price inflation picked up to 3.8% in August, from a three-month low of 3.5%, driven mainly by higher energy costs amid ongoing Middle East tensions.  

Despite the end of a long period of deflation, businesses are struggling to pass higher prices to consumers amid weak demand as economic growth slows. 

 

China Indexes and Stocks 

The Hang Seng Index decreased 0.2% to 25,263.23, and the mainland-focused CSI 300 Index increased 0.2% to 4,570.54. 

Hygon Information Technology decreased 0.5% to ¥235.74, Luxshare Precision Industry increased 3.4% to HK $61.85, Zhongji Innolight advanced 4% to $1,217.0, and Eoptolink Technology inched higher 0.2% to ¥417.51.