Factory prices decline faster than expected

China's factory gate prices fell at a faster-than-expected pace in September and consumer inflation slowed to its weakest in 19 months, underscoring the challenges still facing China as it recovers from the Covid-19 pandemic. The producer price index fell for an eighth straight month on an annual...

Reuters

Friday, October 16, 2020

China's factory gate prices fell at a faster-than-expected pace in September and consumer inflation slowed to its weakest in 19 months, underscoring the challenges still facing China as it recovers from the Covid-19 pandemic.

The producer price index fell for an eighth straight month on an annual basis, while consumer prices grew more slowly than expected.

The world's second largest economy has seen a steady recovery after being hard hit by the coronavirus in the first quarter. But a sustained fall in producer prices, seen as a gauge of industrial demand, may rekindle worries about deflation and prompt authorities to provide more support, analysts said.

The PPI fell 2.1 percent from a year earlier, the National Bureau of Statistics said in a statement. Economists in a Reuters poll had expected the index to decline 1.8 percent after a 2 percent drop in August. On a monthly basis, PPI rose 0.1 percent, after increasing by 0.3 percent in August.

Meanwhile China's consumer price index rose by 1.7 percent in September from a year earlier, its slowest increase since February 2019, as pork price inflation moderated further, the NBS data showed.

Economists in a Reuters poll had expected CPI to increase 1.8 percent after a 2.4 percent rise in August.

Pork price inflation slowed year-on-year as hog production rebounded and as the government increased sales of frozen pork from state reserves, said Dong Lijuan, senior statistician at the NBS. Pork prices surged this time last year as the African swine fever decimated China's pig herd. Pork prices rose 25.5 percent year-on-year in September, slowing from a 52.6 percent increase in August. On a monthly basis, they fell 1.6 percent in September after gaining 1.2 percent in August.