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China Inflation Ticks Up in October as Factory-Gate Deflation Softens

Modest gains tied to capacity curbs plus holiday spending leave policymakers cautious about declaring deflation over.

Overview

  • Official data show CPI rose 0.2% year on year in October and 0.2% month on month, topping forecasts for no change.
  • Core consumer inflation accelerated to 1.2% year on year, the highest in about 20 months, while food prices fell 2.9% from a year earlier.
  • Producer prices declined 2.1% from a year earlier, easing from September’s 2.3% drop and marking a 37th straight monthly fall.
  • NBS statistician Dong Lijuan said capacity management in key industries narrowed price declines, citing coal, photovoltaic equipment, batteries and autos.
  • Policy remains targeted rather than broad, with the central bank keeping rates steady for five months as analysts warn it is premature to call an end to deflation.