* Deflationary pressures may be intensifying

* Reinforce expectations of more stimulus measures

* August CPI +2.0 pct y/y (f'cast +1.8 pct, prev +1.6 pct)

* August PPI -5.9 pct y/y (f'cast -5.5 pct, prev -5.4 pct) (Adds reference to yuan devaluation impact)

By Pete Sweeney and Winni Zhou

BEIJING, Sept 10 (Reuters) - China's manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signalling stubborn deflation risks in the economy and adding to expectations for further stimulus measures.

The producer price index (PPI) fell 5.9 percent in August from the same period last year, its 42nd consecutive month of decline and the biggest drop since the depths of the global financial crisis in late 2009, data showed on Thursday.

The market had expected a decline of 5.5 percent after a drop of 5.4 percent in July.

"The change in PPI is very worrying. It could affect corporate profitability, which in turn could affect consumption and the economy," said Li Huiyong, economist at Shenyin & Wanguo Securities.

"We must step up policy support."

Economists believe China's surprise currency devaluation of nearly 2 percent in mid-August will have little impact on inflation in the near term, in comparison with the effect of sharply lower commodity prices.

The consumer price index (CPI) rose 2 percent from a year earlier to a one-year high, the National Bureau of Statistics said, but the gain was due largely to soaring food prices, not an improvement in economic activity.

Analysts polled by Reuters had predicted CPI would rise 1.8 percent, compared with 1.6 percent posted the prior month.

Indeed, non-food inflation remained subdued at 1.1 percent, unchanged from July.

"The risk for China is still deflation, not inflation. PPI deflation will eventually filter down to affect CPI, and aggregate demand will continue to be weak," said Kevin Lai, chief economist Asia Ex-Japan at Daiwa, adding his firm had just cut its 2016 CPI forecast to -0.5 percent from 0.5 percent.

"In addition all the capital outflows (due to the slowing economy) will force the PBOC to continue purchasing yuan, which is hugely destructive to the monetary base," he said.

VICIOUS CYCLE

Continuously falling producer prices are eating into profits at many Chinese firms and raising the relative burden of their debts. Official and private factory surveys last week also showed manufacturers laid off workers at a faster rate last month as their order books shrank.

The central bank has cut interest rates five times since November and more reductions are expected in coming months, but many economists believe real rates are still too high, discouraging new investment.