Chinese retail sales rose 2.7 percent on the year in July, picking up from growth of 2.0 percent in June. In month-over-month terms, retail sales rose 0.35 percent after falling 0.12 percent previously.

Officials characterised the monthly data published today as showing that"the national economy was generally stable with steady progress", as they did last month. However, they also cautioned that"the adverse impact brought by external environment is increasing, effective demands remain insufficient at home, pains are caused while old growth drivers are replaced by new ones, and sustained economic recovery is still confronted with multiple difficulties and challenges". Having reduced the loan prime rate last month, officials provided little guidance about whether additional policy measures will be considered in the near-term.

Data published today were generally close to consensus expectations. The China's RPI and RPI-P fell from minus 14 and minus 40 to minus 29 and minus 60 respectively, indicating that recent Chinese data in sum are now coming well below consensus forecasts.

After rising a much lower-than-expected 2.0 percent in June, year-over-year sales in August are expected to rise 2.6 percent.

Retail Sales measure goods that are sold to the consumer or end-user, generally in small quantities and in the state in which they were purchased by the retailer. China's retail sales are reported monthly. The critical value is the change from the same month in the previous year.

Retail sales tend to have a muted impact because the Chinese economy is not heavily reliant on consumer spending. However, the government is trying to stimulate consumer spending to give the economy more balance. To this end, the government put into place a basket of stimulus measures, including government subsidies and tax breaks for home appliances and cars, to expand consumption to sustain the economic growth, which was slowed by a slump in exports amid the global economic downturn.