BEIJING- China’s factory gate prices for October dropped for the first time since December 2020, and consumer inflation moderated, underlining faltering domestic demand and disruptions to production amid strict COVID curbs and a weak property sector.
The producer price index (PPI) fell 1.3 percent year-on-year, reversing from a 0.9 percent gain a month earlier, National Bureau of Statistics (NBS) data showed on Wednesday, and compared with a forecast of a 1.5 percent contraction in a Reuters poll.
The deflationary impulse in the producer price gauge partly reflected the sharply higher year-ago levels and falling commodity prices, according to an accompanying NBS statement.
Prices in coal mining and washing industry were down 16.5 percent, deepening from a 2.7 percent drop in the previous month, while those in ferrous metal smelting and rolling processing slumped 21.1 percent after decline 18.0 percent in September.
The consumer price index (CPI) climbed 2.1 percent from a year earlier, easing from a 29-month high of a 2.8 percent increase in September, mainly driven by falling food prices. It was also slower than the 2.4 percent forecast by analysts.
The world’s second-largest economy has been hobbled this year by a recurrence of COVID-19 outbreaks, forcing authorities to implement strict an ti-virus curbs in a blow to factory and consumer activity.
China’s trade engine has also taken a hit, with exports and imports shrinking in October, and economists are warning of further weakness over the coming quarters due to pressure at home and global recession risks.
Almost three years into the pandemic, China has pledged to press on with its strict COVID-19 containment strategy. Analysts say policymakers will be cautious in easing monetary policy for fear of capital flight amid sweeping global interest rate hikes, led by the Federal Reserve.
China’s yuan currency has already been pummeled this year by the global tightening trend and a buoyant US dollar.
The International Monetary Fund last month said it expects China’s growth to slow to 3.2 percent this year, a 1.2-point downgrade from its April projection, on expectations of a gradual lift of strict COVID-19 curbs next year but no quick resolution to the real estate crisis.
