China Inflation Edges Higher in October as Factory Prices Ease
China’s consumer inflation rose slightly in October, supported by increased holiday spending during Golden Week, while producer prices contracted at a slower pace than expected.
Despite the modest uptick, data still pointed to persistent deflationary pressures in the world’s second-largest economy. The producer price index (PPI) remained negative for more than three consecutive years, signaling continued weakness in the industrial sector.
CPI Posts First Positive Reading Since June
According to official data released over the weekend, the consumer price index (CPI) grew 0.2% year-on-year in October, surpassing forecasts that inflation would stay flat. This followed a 0.3% decline in the previous month.
On a monthly basis, CPI also rose 0.2%, marking the first positive reading since June. The improvement was largely driven by increased consumer spending during Golden Week, particularly on travel and discretionary goods. Seasonal promotions and events such as Singles Day also provided a short-term boost to consumption.
However, analysts noted that the overall trend remains fragile. Years of weak demand, falling prices, and ongoing economic uncertainty continue to weigh on inflation momentum.
Producer Prices Contract for 37th Consecutive Month
On the production side, the PPI fell 2.1% year-on-year, slightly better than expectations for a 2.3% drop. While the decline benefited from output restrictions in some industries, it still marked the 37th straight month of factory-gate deflation.
China’s vast manufacturing sector continues to struggle with subdued global demand and soft domestic growth. Recent purchasing managers’ index (PMI) readings for October show limited signs of recovery.
Policy Outlook: Beijing Eyes More Stimulus
In response to the ongoing deflationary environment, Beijing has pledged to roll out additional stimulus measures to stabilize growth.
Improving trade relations with the United States are also expected to support China’s manufacturing outlook and domestic demand in the coming months.
