China wholesale inflation hits highest in more than four years as consumer measure slows
The PPI for October came in at 5.7%, compared to the 5.3% expected by economists polled by Reuters.
Key points
- China's producer price index rose 5.7% in October, the fastest pace since June 2022.
- Consumer inflation slowed to 0.7% in October, missing the 0.8% expected by economists.
- Pinpoint's Zhang Zhiwei said weak domestic demand and the property market are holding back inflation.
China's producer prices rose 5.7% in October, the fastest annual pace since June 2022 and the third straight month of acceleration, CNBC reported. Economists polled by Reuters had expected 5.3%. The gain was driven by sharp increases in prices in the mining and raw materials industries.
Consumer inflation slowed to 0.7% in October, its first deceleration after two months of increases. The reading missed the 0.8% expected by economists and was below September's 0.9%. Core inflation, which excludes food and energy, fell to 0.8% from 1% the month before.
What drove the numbers
Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, told CNBC's "Squawk Box Asia" that very strong external demand drove the producer price increase. On consumer prices, Dong Lijuan, chief statistician of the urban division at China's National Bureau of Statistics, said gasoline was the largest contributor to the rise, offset by a sharper than expected fall in food prices.
The mainland Chinese CSI 300 index gained 0.56% after the data was released. The article also noted the economy grew faster than expected in the third quarter, and September saw a sharp beat in retail sales.
There's no clear sign of stabilization [in that sector] yet
— Zhang Zhiwei
Weak domestic demand
Zhang said domestic demand has been rather weak because of the property market, which he said is a key reason inflation is not picking up in China. "There's no clear sign of stabilization [in that sector] yet," he said, adding that this was weighing on household consumer confidence and local government revenue.
Zhang said overall economic momentum has been weak and has not shown a clear sign of recovery.
