The consumer price index (CPI), China’s main inflation indicator, rose 2.1% year on year in October, down from 2.8% in September, it was announced today.
After reaching the highest value in more than two years in September, the index has moved away from the official target of 3%, set in March by the Chinese authorities for the current year, according to official data published by the National Cabinet. of Chinese Statistics.
Dong Lijuan, a Cabinet statistician, attributed the slowdown to a drop in consumer demand after the China Day holiday period on Oct. 1.
Last month, inflation was mainly supported by the increase in the price of food products, in particular that of pork, which rose 51.8% in the last 12 months.
The price of the most consumed meat in China rose 9.4% between September and October, despite a market intervention by the authorities to stop the increase.
The situation forced the Chinese authorities to release part of the pork reserve five times, since the beginning of September, to moderate the increase in the price of this food.
Since the Russian invasion of Ukraine, China has been relatively spared from rising global food prices.
But Chinese officials have been watching pork prices since a swine fever epidemic hit Chinese producers hard in 2019.
The CPI deceleration was greater than forecast by analysts, who pointed to 2.4% in October, but industrial prices did not fall as much as expected, which was 1.5%.
The producer price index (PPI), which measures industrial prices, fell 1.3% in October, year on year, after increasing 0.9% in September.
The index fell for the first time since 2020, mainly due to weak demand, linked to restrictions imposed by the ‘zero covid’ policy in the world’s second-largest economy since the beginning of the pandemic, the Chinese National Bureau of Statistics said.
The drop in the PPI generally reflects a decrease in demand among consumers and predicts a reduction in corporate profits. At the same time, China is experiencing an unprecedented crisis in the real estate sector, historically an engine of economic growth.
Julian Evans-Pritchard, an analyst at consultancy Capital Economics, predicts the PPI “will remain negative” for much of 2023, also because of falling global commodity prices.
