China’s consumer-price index and producer-price index from the National Bureau of Statistics.

  • higher services prices (prices of air tickets, tourism and accommodation rose over the summer holiday season) dragged CPI up from its negative return in the previous month
  • neverthelss CPI came in lower than the surveyed consensus of expectations from economists
  • food prices fell 1.7% y/y in the month, the same as in July
  • nonfood prices +0.5% y/y

China’s core CPI excludes volatile food and energy prices, it jumped 0.8% y/y in August

  • prior also +0.8% y/y in July
china august 2023 inflation data for cpi and ppi

These numbers, while they overall differ from the consensus are still not much of a surprise. Officially reported inflation numbers are not high and not a concern for the People's Bank of China. If the Bank wishes to ease policy further inflation rates won't stand in the way.

The next MLF is due on the 15th, the LPR setting follows on the 20th.


The PBOC's MLF rate is a benchmark interest rate that banks in China can use to borrow funds from the People's Bank of China for a period of 6 months to 1 year, medium-term liquidity to commercial banks.

The rate is typically announced on the 15th of each month.

The interest rate on the MLF loans is typically higher than the benchmark lending rate (more on these below), which encourages banks to use the facility only when they face a shortage of funds.

MLF loans are secured by collateral, which can be a wide range of assets including bonds, stocks, and other financial instruments. The collateral ensures that the PBOC can recover the funds if the borrower defaults on the loan.

The MLF rate sets the scene for the monthly Loan Prime Rate (LPR) setting.

Current LPR rates are:

  • 3.45% for the one year
  • 4.20% for the five year

The PBOC's Loan Prime Rate (LPR)

  • It is an interest rate benchmark used in China, set by the People's Bank of China each month. While set on the 20th, any new LPR takes effect on the first day of the following month.
  • The LPR serves as a reference rate for banks when they determine the interest rates for (primarily new) loans issued to their customers.
  • Its calculated based on the interest rates that a panel of 18 selected commercial banks in China submit daily to the PBOC.
    • The panel consists of both domestic and foreign banks, with different weights assigned to each bank's contributions based on their size and importance in the Chinese financial system.
    • The LPR is based on the average rates submitted by these panel banks, with the highest and lowest rates excluded to reduce volatility and manipulation. The remaining rates are then ranked, and the median rate becomes the LPR.