China Consumer Price Inflation Eases; Factory-gate Prices Fall For First Time Since 2020

China consumer price inflation slowed more than expected in October on weaker demand and producer prices declined for the first time since December 2020, official data revealed on Wednesday.

Consumer prices grew 2.1 percent in October from the same period last year, the National Bureau of Statistics reported.

This was slower than the 2.8 percent increase posted in September and also economists’ forecast of 2.4 percent.

The government aims to maintain inflation ‘around 3 percent’ in the whole year of 2022.

Excluding food and energy, core inflation held steady at 0.6 percent in October, data showed.

Month-on-month, consumer prices edged up 0.1 percent, weaker than the expected increase of 0.3 percent.

Producer prices declined 1.3 percent on a yearly basis in October largely due to base effects, the NBS said in a separate communique.

The annual fall reversed the 0.9 percent increase in September but the October fall was slower than the 1.5 percent decline expected by economists.

Factory-gate inflation is set to continue easing over the coming quarters due to a further decline in global commodity prices and a higher base for comparison, Julian Evans-Pritchard, an economist at Capital Economics said.

The economist expects producer price inflation to stay in negative territory through the final months of the year and much of 2023.

Consumer price inflation could tick up again in the near-term, the economist noted. But any renewed rise will be moderate and short-lived.

“The upshot is that inflation is unlikely to become a major policy constraint in China,” said Capital Economics’ economist.

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