BEIJING (Reuters) -China’s producer price deflation eased in October and consumer prices returned to positive territory, data showed on Sunday, as the government steps up efforts to curb overcapacity and cut-throat competition among firms.
The producer price index fell 2.1% in October from a year earlier, National Bureau of Statistics data showed, compared with an expected 2.2% decline in a Reuters poll of economists. The index has remained negative since October 2022 and dropped 2.3% in September.
Consumer prices edged up 0.2% from a year earlier, reversing a two-month decline and beating the estimate for no change.
The October price figures indicate that government efforts to rein in excessive competition have helped stabilise prices, but lukewarm domestic demand and geopolitical tensions continue to cloud the business outlook.
China’s economic growth slowed to its weakest in a year in the third quarter, and the youth unemployment rate remained elevated despite a dip in September.
Policymakers have refrained from aggressive stimulus this year, with the central bank keeping interest rates steady for five months, partly due to resilient exports following a trade truce with the United States.
China’s economy is on track to meet the government’s target of around 5% growth this year, but producer deflation, as well as downbeat factory activity and an expected contraction in exports in October indicate waning growth momentum.
Chinese leaders have signalled a sharper shift towards supporting consumption over the next five years, as limited investment room and trade tensions have exposed vulnerabilities, though measures may take time to yield results.
Compared with the previous month, CPI rose 0.2% in October after rising 0.1% in September and compares with a forecast of no change.
Core inflation, which excludes volatile prices of food and fuel, was up 1.2% year-on-year in October, quickening from the 1% increase in September and hitting a 20-month high.
Food prices fell 2.9% year-on-year, after dropping 4.4% in September.
(Reporting by Kevin Yao and Yukun Zhang; Editing by Christopher Cushing and William Mallard)
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