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
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.
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.
“With domestic weakness holding down core inflation and producer prices dropping back, China’s inflation outlook remains benign.”
Chief NBS statistician Dong Lijuan said that a “variety of measures” had been used to stabilise the prices of important goods for people’s livelihoods, with the consumer market running generally smoothly”.
In comparison, the annual rate of inflation in the United States slowed slightly to 8.2 per cent from 8.3 per cent.
PPI inflation is likely to continue declining during the rest of the year thanks to base effects and a further drop back in commodity prices. Meanwhile, we doubt consumer price inflation will rise much farther