China Producer Prices Hit 4.5-Year High as Consumer Inflation Slows

The National Bureau of Statistics of China reported that the producer price index (PPI) accelerated to 5.7% in October, marking the fastest growth since June 2022. This figure exceeded economist forecasts of 5.3% and represents the third consecutive monthly increase, driven primarily by price surges in mining, raw materials, and energy-intensive sectors like chemicals and coal mining due to elevated global oil prices.

In contrast, consumer inflation slowed to 0.7% in October, down from 0.9% in September and missing the expected 0.8% rise. Core inflation also eased to 0.8% from 1.0% the previous month. While gasoline prices provided some support to the consumer price index (CPI), a sharper-than-expected drop in food prices offset those gains.

The divergence between rising industrial costs and cooling consumer prices highlights a pronounced imbalance between robust supply and weak domestic demand. While third-quarter growth remained resilient due to exports, household spending continues to be constrained by a struggling stock market and uncertainty regarding global trade tensions. This gap suggests that manufacturers are absorbing increased factory-gate costs rather than passing them to consumers, a trend that threatens industrial profit margins. Following the data release, the mainland Chinese CSI 300 index rose 0.56%.