- In October, China’s consumer price index shrank by 0.2% year-on-year, exceeding the anticipated 0.1% decline.
- The producer price index also fell, declining 2.6% last month, marking the 13th consecutive month of decline.
An employee works on the assembly line of LED lighting products in China.
Vcg | Visual China Group | Getty Images
Amid an uneven post-Covid recovery, China experienced a decrease in consumer prices for the month of October.
Data from China’s National Bureau of Statistics revealed that the October
consumer price index shrank 0.2% year-on-year, surpassing economists’ expectations of a 0.1% decline as per Reuters’ poll.
This follows China’s unexpectedly flat CPI in September, emphasizing the need for additional policy support.
Producer prices declined 2.6%, slightly lower than the expected 2.7% decline, maintaining its negative trend for the 13th consecutive month. Meanwhile, China’s PPI was at 2.5% in September, indicating the continuation of factory deflationary pressures.
“China is still in a deflationary environment, and domestic demand remains sluggish,” remarked Zhiwei Zhang, president, and chief economist of Pinpoint Asset Management.
Despite sluggish growth, Beijing has implemented targeted policy support. However, an ongoing debt crisis within two of China’s leading real estate developers has further dampened consumer confidence. The property sector accounts for about 30% of China’s economy.
“With the budget deficit increasing and potential government support for property developers, domestic demand is expected to improve next year,” added Zhang.
Investors are closely monitoring this year’s Singles Day shopping festival, which concludes on November 11, to assess the depth of Chinese consumption.
However, enthusiasm for the shopping festival has dwindled.
“I don’t think this year’s Singles Day sale has met expectations,” remarked Hao Hong, partner, and chief economist at Grow Investment Group during CNBC’s “Squawk Box Asia.”
“Ever since last year, people have stopped spending a lot of money on the Singles Day sale, resulting in muted sales this year,” added Hong.
