Producer prices in China grew at the fastest rate since June 2022, accelerating for the third month in a row.
The PPI for October came in at 5.7%, compared to the 5.3% expected by economists polled by Reuters. The increase was driven by a sharp rise in prices in the mining and raw materials industries.
The increase was driven by very strong external demand, Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, told CNBC’s “Squawk Box Asia.”
Consumer inflation in China slowed to 0.7% in October, its first deceleration after two straight 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 strips out food and energy prices, came in at 0.8%, down from the 1% seen in the month before.
The rise in consumer prices were 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, according to Dong Lijuan, chief statistician of the urban division at China’s National Bureau of Statistics.
The Chinese economy has shown some signs of expansion recently. It 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 said that domestic demand has been rather weak due to the property market, and this is a key reason why inflation is not picking up in China
“There’s no clear sign of stabilization [in that sector] yet,” he said, adding this was weighing on the household consumer confidence and local government revenue.
“So the the overall economic momentum has been weak and hasn’t really seen [a] clear sign of recovery,” Zhang explained.
