China: Inflation falls to lowest level since May in October
November 10, 2022
Consumer inflation came in at 2.1% in October, down from September’s 2.8% and below market expectations. October's figure marked the weakest inflation rate since May, and was the result of weak domestic demand.
Annual average inflation rose to 2.0% in October (September: 1.9%). Meanwhile, producer prices fell 1.3% on an annual basis in October, which contrasted September's 0.9% increase. The decline in producer prices was the first since December 2020, and was due to a challenging base of comparison and falls in international commodity prices.
Finally, consumer prices rose 0.10% from the previous month in October, moderating from September's 0.30% increase.
On the reading and near-term outlook, Nomura analysts said:
“Unlike the rest of the world, China printed low inflation due to weak domestic demand as a result of its zero-Covid strategy (ZCS), crashing property markets and some other sectoral policies. We expect CPI inflation to drop further to 1.8% y-o-y in November on worsening lockdowns and falling export growth, which could suppress domestic prices. PPI inflation could edge up slightly to -1.1% y-o-y in November thanks to a higher base.”