China’s Factory Prices Show Flicker of Hope in Deflation Fight

China’s factory prices fell at a slower pace in August, an encouraging development for an economy mired in deflation. Producer prices slid 2.9%, extending a years-long streak of negative readings, but still an improvement from July’s steeper drop.

It’s a tentative sign that Beijing’s campaign to rein in overcapacity in sectors ranging from solar to steel and cement might be having an impact. The so-called “anti-involution” campaign has picked up pace in recent months, spurring hopes that industrial oversupply, which had weighed on prices of commodities and factory inputs, may ease.