Muted inflation data yesterday added to a run of August figures suggesting the protracted slowdown in China’s economy may be bottoming out, helped by targeted support measures and signs of improved export demand.

A steady consumer inflation rate also gives the People’s Bank of China some room to manoeuvre in response to any shock that might arise as the US Federal Reserve starts to taper its monetary stimulus.

However, any sharp policy shifts in the world’s second-largest economy seem unlikely amid concerns about rising property prices and after efforts to curtail unregulated lending.

“There is no sign of any shift in monetary policy,” said Jerry Hu, an economist at Shanghai Securities, who saw stable consumer prices in the months ahead.

“I think monetary conditions will become tighter, probably through a combination of quantitative tightening and low interest rates.”

Consumer prices rose 2.6 per cent in August from a year earlier, the National Bureau of Statistics said, in line with market expectations and July’s 2.7 per cent rise. Month-on-month, prices were up 0.5 per cent, slightly stronger than a forecast rise of 0.4 per cent.

Producer prices fell an annual 1.6 per cent, less than both a market forecast of 1.8 per cent and a fall of 2.3 per cent in July. While factory-gate deflation has now lasted for 18 months, the pace of decline has steadily eased from a peak of 3.6 per cent in September 2012.

“The trend of stabilisation in the economy is becoming clearer,” Yu Qiumei, a senior statistician at the bureau, said in a statement.

Exports rose more than expected, helped by improving demand in major markets, and manufacturing surveys suggested capital spending and industrial output have gathered steam in response to government steps to spur investment and promises to push through reforms.