An undated editorial photo of Chinese yuan cash bills and the flag of the People’s Republic of China.
Javier Ghersi | Moment | Getty Images
China’s consumer prices were flat in September, while factory gate prices saw annual declines slow for a third month.
The data underscores the uneven nature of the post-Covid recovery in the world’s second-largest economy that’s been further roiled by lingering debt concerns among its real estate developers.
The consumer price index was flat on an annual basis in September, the National Bureau of Statistics reported Friday, below than the median estimate for a 0.2% increase in a Reuters poll. CPI inched up 0.1% in August for the first year-on-year increase in three months.
Core inflation — excluding energy and food prices — however, climbed 0.8% in September from a year earlier, the bureau said in a separate statement. This rate of increase was similar to the one recorded in August.
The producer price index fell 2.5% from a year earlier, weaker than expectations for a 2.4% decline, after a 3% drop in August. The drop in factory prices, though, was the smallest in seven months.
Tepid prices underscore what China’s top leaders labeled as a “tortuous” economic recovery after the country emerged from its draconian zero Covid curbs toward the end of last year. China stands as a stark outlier among the world’s major economies that are mostly still battling stubbornly high inflation after the Covid-19 pandemic peaked.
The recovery of domestic demand is not strong, without a significant boost from fiscal support.
Zhiwei Zhang
Pinpoint Asset Management
In fact, China was tethering on the verge of deflation just months before. Despite narrowing producer prices in September, the decline is still the 12th straight monthly decline on an annualized basis.
“CPI inflation at zero indicates the deflationary pressure in China is still a real risk to the economy,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
“The recovery of domestic demand is not strong, without a significant boost from fiscal support. The damage from the property sector slowdown on consumer confidence continue[s] to weigh on household demand,” he added.
Weaker food prices
Weaker food prices were a big drag on September’s consumer prices. Food prices collectively fell 3.2% from a year earlier.
In particular, China’s National Bureau of Statistics said the price of pork — a key staple meat in Chinese diets — tumbled 22% last month from a year ago. That’s as the price of livestock and meat collectively dropped 12.8% and the price of fresh vegetables fell 6.4%.
The bureau released information that showed China’s national consumer prices increased 0.4% overall in the first nine months this year, compared to a year ago.
Month-on-month, consumer prices edged up 0.2% in September, with food prices increasing 0.3% — representing a decrease of 0.2 percentage points from August’s print compared to the previous month.
“The market supply is relatively sufficient before the Mid-Autumn Festival and National Day this year, and the food price increase is slightly lower than the historical average for the same period,” said Dong Lijuan, chief statistician of the Urban Department of the National Bureau of Statistics, in a statement.
China’s Mid-Autumn Festival and National Day were in early October this year.
This is a developing story. Please check back for further updates.
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