A customer picks tomatoes at a market stall in the morning market in Beijing, China, on August 9, 2023.Reuters/Tingshu Wang/File photo Obtaining license rights
BEIJING, Nov 9 (Reuters) – Factory-gate deflation deepened, casting doubt on the prospects for a broader economic recovery, while key indicators of domestic demand showed weakness not seen since the pandemic, leading to weaker demand in October. Consumer prices in China have fallen. .
The Consumer Price Index (CPI) in October fell 0.2% year-on-year and 0.1% from September, according to data from the National Bureau of Statistics (NBS) on Thursday.
This decline was lower than the median estimate in a Reuters survey of a 0.1% decline year-on-year and flat month-on-month forecast. The last time both indicators were negative at the same time was in November 2020 during the COVID-19 pandemic.
The top figure fell 30.1%, accelerating from a 22% decline in September amid an oversupply of pigs and weak demand, dragged down by further weakness in pork prices.
But even core inflation, which excludes food and fuel prices, slowed to 0.6% in October from 0.8% in September. This points to the risk that China will once again fail to meet the government’s full-year headline inflation target as it continues to battle disinflationary forces. About 3%.
Consumer prices fell into deflation in July, returned to positive territory in August, but remained flat in September. Factory deflation continued for the 13th consecutive month in October.
Combined with other economic indicators, the fourth quarter data so far suggests that a meaningful recovery remains elusive for the world’s second-largest economy.
“The data shows that combating persistent disinflation amid weak demand remains a challenge for Chinese policymakers,” said Bruce Pang, chief economist at Jones Lang LaSalle.
“The right policy mix and further support are needed to prevent a downward trend in inflation expectations that could threaten business confidence and household spending.”
Month-on-month, the CPI decreased by 0.1% and rose by 0.2% in September.
The producer price index (PPI) decreased by 2.6% compared to the same month last year (2.5% in September). Economists had expected a 2.7% decline in October.
Authorities have repeatedly downplayed the risks.
In August, a statistics bureau official said, “There is no deflation in China, and there will be no deflation in the future.”
The Chinese government has stepped up measures to support the broader economy, including issuing 1 trillion yuan ($137.43 billion) in sovereign debt and allowing local governments to bring forward some of their 2024 bond allocations. .
But the real estate crisis, local debt risks and policy differences with Western countries are all complicating the recovery process.
Recent economic indicators have been mixed.
China’s imports unexpectedly increased in October, but exports contracted at a faster pace. Meanwhile, last month’s official purchasing managers’ index showed an unexpected contraction in factory activity and a slowdown in service activity.
China also recorded its first-ever quarterly deficit in foreign direct investment (FDI), underscoring the pressure on capital outflows due to “risk aversion” moves by Western governments.
“We expect China’s economy to grow by 5.0% in 2023 and 4.0% in 2024 and 2025, in accordance with the targets set by authorities,” Moody’s said on Thursday.
“However, we see downside risks to China’s growth trend due to structural factors.”
Reported by Mr. Ping Gao Liang, Mr. Cao Era, and Mr. Ryan Wu.Editing: Sam Holmes
Our standards: Thomson Reuters Trust Principles.