Post by : Badri Ariffin

China’s inflation story showed signs of a subtle shift in October as consumer prices ticked up, while producer price deflation eased, highlighting a mixed economic picture. After months of falling prices, the country’s consumer price index (CPI) increased by 0.2% year-on-year, reversing a two-month decline and exceeding forecasts for no change.

Meanwhile, the producer price index (PPI), which tracks factory-level prices, fell 2.1% from a year earlier—slightly better than analysts’ expectations of a 2.2% drop. The easing deflation indicates that government measures to reduce cut-throat competition among firms and curb overcapacity are beginning to stabilize prices, even as overall domestic demand remains moderate.

Food prices continued to soften, falling 2.9% compared with the same period last year, though this was a smaller drop than September’s 4.4% decline. Core inflation, excluding volatile food and fuel costs, reached 1.2%, the highest in 20 months, up from 1% in September. This points to a gradual recovery in broader price pressures across the economy.

The economic backdrop remains challenging. China’s growth slowed to its weakest in a year during the third quarter, and youth unemployment remains high despite a minor dip in September. Policymakers have largely avoided aggressive stimulus measures, keeping interest rates steady for five consecutive months, banking on resilient exports following the US-China trade truce.

The October data suggests that while government efforts are gradually stabilizing prices, challenges such as soft domestic demand, slowing factory activity, and an anticipated fall in exports signal that growth momentum is waning. The government remains on track to meet its 5% annual growth target, though structural shifts toward boosting consumption may take time to fully materialize.

#Global News