China's factory-gate inflation hits fastest pace since 2022 as consumer prices cool

China’s producer price index (PPI) rose 5.7% in October from a year earlier, up from 5.0% in September and above the 5.3% forecast in a Reuters poll, the National Bureau of Statistics (NBS) said on Monday, 9 November. It was the largest annual rise since June 2022.

Energy drives costs

According to the NBS, prices in coal mining rose 36.6% year on year and in oil and gas extraction 35.0%. Reuters noted that the war in the Middle East has kept global energy prices high, raising costs for energy-intensive industries. Month on month, the PPI rose 0.7%, a slower pace than in September.

Consumers still cautious

The consumer price index (CPI) rose 0.7% year on year, down from 0.9% and just below the 0.8% expected. Core inflation, excluding food and energy, eased to 0.8% from 1.0%. ING said food prices fell 2.9% year on year, with fresh vegetables down 16.9% and pork 8.6%.

“We think the price shock from the Middle East conflict will keep inflation elevated over the coming months. But its impact should fade next year,” Capital Economics’ Nguyen Hoang Nam told Reuters. Economists quoted by Reuters said weak domestic demand and the absence of major stimulus continue to restrain consumer prices.