BEIJING: China’s producer price deflation eased in October and consumer prices returned to positive territory, data showed on Sunday (Nov 9), as the government steps up efforts to curb over-capacity and cut-throat competition among firms.
Despite the improvement in headline numbers, analysts warn that deflationary pressures on the world’s second-largest economy are not yet over, and the government may have to roll out additional policy measures to spur demand.
“Demand remains weak but a rebound in CPI indicates that supply-side policies are having an effect, and the supply-demand balance in many industries is improving,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
“The future trend of inflation will depend on how much demand-side policies are strengthened.”
The producer price index fell 2.1 per cent in October from a year earlier, National Bureau of Statistics (NBS) data showed, compared with an expected 2.2 per cent decline in a Reuters poll of economists. The index has remained negative since October 2022 and dropped 2.3 per cent in September.
NBS statistician Dong Lijuan said capacity management in key industries has narrowed year-on-year producer price declines. In coal mining and washing, the price drop narrowed by 1.2 percentage points and price falls in photovoltaic equipment, battery, and automobile manufacturing narrowed by 1.4, 1.3, and 0.7 percentage points, respectively.
Consumer prices edged up 0.2 per cent from a year earlier, reversing a two-month decline and beating the estimate for no change.
Against the previous month, CPI rose 0.2 per cent in October after rising 0.1 per cent in September and compares with a forecast of no change.
Core inflation, which excludes volatile prices of food and fuel, was up 1.2 per cent year-on-year in October, quickening from the 1 per cent increase in September and hitting a 20-month high.
Food prices fell 2.9 per cent year-on-year, after dropping 4.4 per cent in September.
Source: CNA
