China’s Oct consumer prices fall faster than expected

Customers select tomatoes at a stall inside a morning market in Beijing, China Aug 9, 2023. REUTERS/Tingshu Wang/File photo

BEIJING  -China’s consumer prices swung into decline and factory-gate deflation persisted in October, suggesting pressures on demand have picked up as the world’s second-largest economy struggles to emerge from a post-pandemic slump.

The consumer price index (CPI) dropped 0.2 percent in October from a year earlier, data from the National Bureau of Statistics (NBS) showed on Thursday, a faster decline than the forecast for a 0.1 percent fall in a Reuters poll. CPI was unchanged in September.

The figure is dragged down by the faster slumping pork prices, down 30.1 percent after a 22 percent slide in September, driven by an oversupply of pigs and weak demand.

The data follows other economic indicators that suggest a meaningful economic recovery remains elusive and an uphill challenge for Chinese officials seeking to restore momentum.

READ: China factory activity shrinks in Oct, dents recovery momentum

CPI fell 0.1 percent month-on-month, compared with 0.2 percent gain in September.

Year-on-year core inflation, which excludes food and fuel prices, was up 0.6 percent, slowing from a 0.8 percent rise in September.

The producer price index (PPI) fell 2.6 percent year-on-year against a 2.5 percent drop in September, marking the 13th straight month of decline. Economists had predicted a 2.7 percent fall in October.

Beijing has been ramping up measures to support the economy, including 1 trillion yuan ($137.43 billion) in sovereign bond issuance and allowing local governments to frontload part of their 2024 bond quotas.

READ: China’s new bonds to help economic recovery, official says

But headwinds remain with a property crisis, local debt risks and policy divergence with the West all complicating the recovery process.

Recent indicators have been mixed. China’s imports unexpectedly grew in October while exports contracted at a quicker pace. Meanwhile, the official purchasing managers’ index showed factory activity unexpectedly contracting and services activity slowing last month.

China also recorded its first-ever quarterly deficit in foreign direct investment (FDI), underlining capital outflow pressure following Western governments’ “de-risking” moves.