Chinese inflation spikes at plants and cools in shops
China's producer inflation accelerated to its fastest pace in nearly four-and-a-half years while consumer inflation cooled in October, data showed on Monday, reflecting persistent cost pressures from higher oil prices despite weak domestic demand. Global oil prices remained elevated during much of last month, raising costs for coal mining, oil and natural gas extraction processing, chemicals and…
China's producer inflation surged to its fastest rate in nearly four and a half years in October, while consumer inflation cooled down, according to data released on Monday. This indicates that high oil prices continue to exert cost pressures on the economy, even though domestic demand remains weak. Global oil prices have been elevated for most of the month, driving up expenses for energy-intensive industries such as coal mining, oil and natural gas extraction, processing, and chemicals, which have been the main contributors to producer-price inflation.
Despite these upstream price pressures, they have not yet fully translated into higher consumer prices due to the soft demand conditions. The producer price index increased by 5.7 percent year-on-year, surpassing economists' forecasts for a 5.3 percent rise, while the consumer price index climbed by 0.7 percent annually, slightly below the 0.8 percent increase expected by analysts.
On a monthly basis, the consumer price index matched forecasts for a stable outcome after a 0.2 percent rise in September. Although China's economy expanded faster than anticipated in the third quarter, driven by strong exports, weak household demand has continued to restrain consumer spending. Ongoing trade tensions and an increasingly uncertain global outlook are adding to the uncertainty surrounding exports.
External shocks are having a more significant impact, and the imbalance between abundant supply and weak domestic demand persists, as per a statement from a China state planner official last month. The Chinese stock market, which has been struggling, particularly with AI-related stocks plummeting from their lofty valuations due to concerns about AI demand and export restrictions targeting China, could further dampen consumer spending.
Core inflation, which excludes volatile food and energy prices, decelerated to 0.8 percent in October from one percent in September, providing a measure of the underlying price pressures in the economy.
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