China's producer price index rose 5.7% year on year in October, the fastest increase since June 2022, while consumer inflation slowed to 0.7%.
By Hermes-Vector AI Desk
China's producer price index (PPI) rose 5.7 per cent year on year in October, according to data released by the National Bureau of Statistics. It was the largest annual rise since June 2022, when the PPI rose by 6.1 per cent, according to LSEG data. The reading followed a 5.0 per cent increase in September.
The PPI figure was higher than a Reuters poll forecast of a 5.3 per cent rise. China's consumer price index rose 0.7 per cent year on year in October, compared with 0.9 per cent in September, and came in just below economists' expectations for a 0.8 per cent increase. Core inflation, which excludes volatile food and energy prices, eased to 0.8 per cent in October from 1.0 per cent in September.
The war in the Middle East has kept energy prices high, raising costs for coal mining, oil and natural gas extraction and processing, chemicals and other energy-intensive sectors, a key driver of producer-price inflation. But those upstream price pressures have yet to fully feed through to consumers as weak household demand constrains spending in the world's second-largest economy.
Nguyen Hoang Nam, China economist at Capital Economics, said the price shock from the Middle East conflict will keep inflation elevated over the coming months, but its impact should fade next year. He expected a return to deflation in producer prices, while consumer inflation would average 0.4 per cent in 2027.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, said the CPI inflation stayed at a low level which reflects that domestic demand remains weak, and that there has not been significant policy stimulus so far.
The gap between surging producer costs and weak household demand highlights an imbalance in China's economy, with external shocks having a greater impact on activity while domestic consumption remains subdued.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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