China's Economy Shows Signs of Recovery with Easing Deflation Pressures

China's consumer prices rose 0.1% in August, returning to positive territory, while factory-gate price declines slowed, indicating easing deflation pressures and signs of stabilization in the economy. However, analysts suggest that more policy support is needed to boost consumer demand, as the labor market recovery slows and household income expectations remain uncertain. The producer price index fell 3.0% in August, the smallest drop in five months. China's central bank may continue to cut interest rates and bank reserve requirement ratios to stimulate growth.