In October, China’s consumer prices edged up by 0.2% year on year, ending several months of deflation. This increase, boosted by holiday spending during the National Day and Mid-Autumn Festival, was stronger than anticipated and marked the first CPI rise since June.
Food prices fell 2.9% annually but rose slightly month on month. Meanwhile, factory gate prices continued to decline, down 2.1% year on year, extending three years of wholesale deflation, though producer prices nudged up 0.1% from September.
Dong Lijuan of the National Bureau of Statistics explained, “In October, policies aimed at expanding domestic demand continued to take effect, coupled with the boost from the National Day and Mid-Autumn Festival holidays.”
Industrial profits climbed over 21% in September, but experts warn local governments’ dependence on tax revenues may perpetuate overproduction without tax reforms.
Manufacturing contracted more sharply than expected in October, hitting a six-month low, with falling production, orders, inventory, and employment, amid trade tensions with the U.S. and a weak housing market.
China’s exports unexpectedly shrank in October, with shipments to the U.S. down 25% for the seventh month running. However, a trade truce agreed by Presidents Donald Trump and Xi Jinping in late October could ease export pressures.
China’s leadership has pledged to “vigorously boost consumption” and balance this with “effective investment” as it aims to expand domestic demand under its new economic plan.