Explainer | China inflation: 4 takeaways from September’s data as consumer prices remained flat
- China’s consumer price index (CPI) remained flat from a year earlier in September, still well short of the control target of around 3 per cent growth for 2023
- Producer price index (PPI) fell for a 12th month in a row, but the 2.5 per cent fall from a year earlier narrowed from the decrease of 3 per cent in August
1. Deflationary pressure still a real risk
Analysts pointed to a decline in food price inflation as being the “main culprit” for CPI edging down last month, while energy price deflation eased further due to the recent rise in oil prices.
“China’s headline CPI edged down to 0 per cent growth as lower food prices outweighed higher oil prices and was a touch softer-than-expected,” economists at HSBC said.
Within CPI, overall food prices dropped by 3.2 per cent year on year last month, while pork prices - which have a high weighting in China’s CPI basket - fell by 22 per cent, compared to a fall of 17.9 per cent in August.
“CPI inflation at zero indicates the deflationary pressure in China is still a real risk to the economy,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.
“The recovery of domestic demand is not strong without a significant boost from fiscal support. The damage from the property sector slowdown on consumer confidence continues to weigh on household demand.”
CPI in the first nine months of the year, meanwhile, rose by 0.4 per cent year on year, far below Beijing’s annual control target of 3 per cent.