China inflation: consumer price spike to ‘prove temporary’ after food prices lift index to near 2.5-year high

China’s consumer price index (CPI) rose by 2.8 per cent in September from a year earlier, up from a rise of 2.5 per cent in August

Producer price index (PPI), which reflects the prices that factories charge wholesalers for products, rose by 0.9 per cent in September, down from a rise of 2.3 per cent in August

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China’s producer price index (PPI), which reflects the prices that factories charge wholesalers for products, rose by 0.9 per cent in September, down from a rise of 2.3 per cent in August. Photo: AFP

Published: 9:34am, 14 Oct 2022Updated: 2:50pm, 14 Oct 2022

A spike in China’s consumer inflation last month is set to only “prove temporary” after a rise in food prices, analysts said, while producer prices are set to continue to ease.

China’s consumer price index (CPI) rose by 2.8 per cent in September from a year earlier to sit just under Beijing’s target of “around 3 per cent” for the year, up from 2.5 per cent in August, the National Bureau of Statistics (NBS) said on Friday.

This was below expectations despite rising to the highest level since hitting 3.3 per cent in April 2020, with CPI having been expected to increase by 3 per cent last month, according to Chinese financial data provider Wind.

The increase was driven by food prices rising by 8.8 per cent from a year earlier in September, compared with 6.1 per cent growth in August, while non-food prices grew by 1.5 per cent last month, year on year, down from a reading of 1.7 per cent growth in August.

“Consumer price inflation rose to a 29-month high in September and is now scraping up against the government’s preferred ceiling of 3 per cent. But this was due to a rise in food inflation that is likely to prove temporary,” said Zichun Huang and Julian Evans-Pritchard, China economists at Capital Economics.