China Wholesale Inflation Rises to 5.7% in October as Consumer Prices Slow

China Wholesale Inflation Hits 5.7% in October

YUEQING, CHINA - October 14: China's wholesale inflation reached 5.7% in October, the fastest rate since June 2022, marking the highest level in more than four years. This surge was driven by sharp increases in mining and raw materials prices, with the PPI for October coming in at 5.7% compared to the 5.3% expected by economists.

Consumer inflation in China slowed to 0.7% in October, its first deceleration after two consecutive months of increases. The figure missed expectations of a 0.8% rise from economists polled by Reuters and was lower than the 0.9% seen in September. Core inflation, which excludes food and energy prices, came in at 0.8%, down from 1% in the prior month.

While gasoline prices remained the largest contributor to the overall price increase, a sharper-than-expected fall in food prices helped offset this trend. "The rise in consumer prices was still held up by prices of gasoline, which was the largest contributor to the increase in prices, but this was offset by a sharper than expected fall in food prices," said Dong Lijuan, chief statistician of the urban division at China's National Bureau of Statistics.

The broader economic picture shows some signs of expansion. The Chinese economy grew faster than expected in the third quarter, and September saw a sharp beat in retail sales. The mainland Chinese CSI 300 index gained 0.56% after the data release. Pinpoint's Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, noted that domestic demand has been weak due to the property market, which is a key reason why inflation is not picking up in China.

"There's no clear sign of stabilization [in that sector] yet," Zhang explained, adding that this weakness is weighing on household consumer confidence and local government revenue. "So the overall economic momentum has been weak and hasn't really seen [a] clear sign of recovery," he continued.